The essential characteristics of a liability under the definition in the Conceptual Framework are:
I. Settlement requiring an outflow of resources embodying economic benefits.
II. A present obligation to an external party.
III. A legal debt.
IV. The obligation must have resulted from past events.

Question

Quizplus · Accepted Answer

According to the Conceptual Framework, a liability is defined as a present obligation to an external party resulting from past events, which requires an outflow of resources embodying economic benefits. Therefore, options I, II, and IV fully capture the essential characteristics of a liability as outlined in the Conceptual Framework. Option III, however, is not a necessary characteristic of a liability since not all obligations arise from legal debts.

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