All of the following statements regarding uncertainty in liabilities are true except:
A)Liabilities can involve uncertainty in whom to pay.
B)A company can create a known amount when issuing a note even though the holder of the not may not be known until the maturity date.
C)A company can have an obligation of a known amount to a known creditor but not know when it must be paid.
D)A company only records liabilities when it knows whom to pay, when to pay, and how much to pay.
E)A company can be aware of an obligation but not know how much will be required to settle it.

Question

Quizplus · Accepted Answer

Statement D is false. A company may record a liability even if it does not know whom to pay, when to pay, or how much to pay. Liabilities may also be recorded when probabilities of loss and the amount of loss are estimable, but not exact.

All of the Following Statements Regarding Uncertainty in Liabilities Are