An accounting _____ arises when a firm incurs an obligation to make a future sacrifice that, because of a past event or transaction, it has little or no discretion to avoid.
A)asset
B)liability
C)shareholders' equity
D)revenue
E)expense

Question

Quizplus · Accepted Answer

According to the definition given, the situation described clearly falls under the category of a liability. An asset would represent something the company owns or controls, while shareholders' equity is the residual interest in the assets of the company after deducting liabilities. Revenue and expenses are not relevant to the definition given.

An Accounting _____ Arises When a Firm Incurs an Obligation