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4. Which of the following is not one of the essential characteristics of a liability? a. Result from past transactions o...

4. Which of the following is not one of the essential characteristics of a liability?

a. Result from past transactions or events

b. Present sacrifice of economic benefits.

c. Arise from present obligations (to transfer goods or provide services) to other entities.

d. All the above are characteristics of liabilities.

e. None of the above are characteristics of liabilities It is the future sacrifice of economic benefits

Answer is B. Can you explain please?

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Answer #1

Solution:

The FASB has defined liabilities as “probable future sacrifices of economic benefits arising from present obligations of a particular entity to transfer assets or provide services to other entities in the future as a result of past transactions or events.”

Therefore "Present sacrifice of economic benefits." is not one of the essential characteristics of a liability" because liability is future sacrifice of economic benefits.

Hence option B is correct.

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