ACCT-311 Midterm: ACCT 316- Midterm Review 1
Document Summary
Liability: obligation that arises from a past transaction that required an outflow of assets or provisions of services: represents a duty or responsibility, little or no discretion to avoid, transaction or event has already occurred. Example: ap is an obligation that arises when the entity purchases an item using credit and meets the definition of a liability. Proposed definition of a liability under new ifrs framework: liability has three essential characteristics, exists a present time (i. e. at balance sheet date, represents economic burdens or obligations. Includes unconditional obligations and stand-ready obligations (liability contingent on some future even occurring or not occurring: these burdens/obligations are enforceable. I(cid:374)(cid:272)ludes (cid:272)o(cid:374)st(cid:396)u(cid:272)ti(cid:448)e o(cid:271)ligatio(cid:374)s (cid:894)o(cid:271)ligatio(cid:374)s (cid:271)ased o(cid:374) e(cid:374)tit(cid:455)"s present or past practices) Accounts payable: are amounts owed to another entity for purchases, made on account, related to ordinary activities of the business. Recorded for purchase of inventory when title transfers.
