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Nuetrik [128]
3 years ago
13

To be recorded as a liability, an item must meet three specific conditions. Two of them are: it must involve probable future sac

rifice of economic resources by the entity, and it must be a present obligation that arose as a result of a past transaction. Which one of the following is the third condition?
The item must reduce the market value of the recording entity

It must involve a transfer of resources to another entity

It must involve the expenditure of cash now or in the future

It must not cause total liabilities to exceed total assets
Business
1 answer:
natima [27]3 years ago
5 0

Answer:

It must involve the transfer of resources to another entity.

Explanation:

A liability is defined as an obligation of future outflow of economic benefits that arise as a result of past actions either through sales , exchange of assets or services , or any other business related events.

Before a liability can be recognized , it must satisfy these three conditions

  1. It must involve probable outflow of economic resources
  2. A present obligation that arose as a result of past transactions
  3. It must involve a transfer of resources to another entity
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