Question

Which of the following statements regarding uncertainty in liabilities is not correct? Group of answer choices Liabilities can involve uncertainty in whom to pay. A company can have an obligation of a known amount to a known creditor, but not know when it must be paid. A company can only record a liability when it knows whom to pay, when to pay, and how much to pay. A company can be aware of an obligation, but not know how much will be required to settle it.

Answer 1

Answer: A company can only record a liability when it knows whom to pay, when to pay, and how much to pay

Explanation:

A liability is simply defined as the amount that a particular company owes. Liabilities consist of loans, accrued expenses, defered revenue, and accounts payable.

We should note that liabilities can involve uncertainty in whom to pay. Also, a company can have an obligation of a known amount to a known creditor, but not know when it must be paid.

Based on the options given in the question, the answer will be "a company can only record a liability when it knows whom to pay, when to pay, and how much to pay".