The essential characteristics of a liability under the definition in the Conceptual Framework are?
i.A legal debt.
ii.A present obligation to an external party.
iii.Settlement requiring an outflow of resources embodying economic benefits.
iv.The obligation must have resulted from past events.

Question

Quizplus · Accepted Answer

The essential characteristics of a liability are a present obligation to an external party that has arisen from past events, which will result in an outflow of resources (usually economic benefits) to settle a legal debt. Choice D includes all of these essential characteristics, making it the best answer. Choice A includes all of the essential characteristics but is not the best answer as it is not necessary to include the word "legal" in the definition. Choice B does not include the characteristic of "obligation to an external party," and choice C does not include the characteristic of the outflow of resources to settle the obligation.

The Essential Characteristics of a Liability Under the Definition in the Conceptual