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 be aware of an obligation but not know how much will be required to settle it.
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 can create a liability with a known amount even when the holder of the note may not be known until the maturity date.
E) A company only records liabilities when it knows whom to pay, when to pay, and how much to pay.

Question

Quizplus · Accepted Answer

This statement is false because a company may record a liability even if it is uncertain about certain details such as when, whom, or how much to pay. Liabilities can be recorded based on the best estimate available at the time, with any necessary adjustments made later if needed.

All of the Following Statements Regarding Uncertainty in Liabilities Are