A commitment is a legal obligation that does not meet the technicalrequirements for recognition as a liability.O a.trueO b. falseWhen taking a physical inventory under the retail method, it is necessary toknow only the quantity of items on hand.O a. falseb. true Which of the following companies would be most likely to use the retailmethod?O a. Afarm supply companyO b. Awomen's dress shopOc Adealer in heavy machineryO d. ATVrepair companyA successful credit policy balances an acceptable level of credit losses withthe potential for profit from total credit sales.Oa. falseOb. truestionWhich of the following statements is true about factoring withoutrecourse?O a. The fee will be lower than if the factoring were with recourse.O b. The seller of the receivables is liable upon default of the debtor.O c. The factor's risk is lower than if the factoring were with recourse.O d. An example is the use of maior credit cards

Liability means the amount to be paid to an outsider by the business which is shown on liability…

Answered: A commitment is a legal obligation that…

A commitment is a legal obligation that does not meet the technical requirements for recognition as a liability. O a. true Ob. false

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Concept explainers

Contingent Liabilities and Provisions

A contingent liability can be defined as a liability the occurrence of which is dependent upon the happening of an uncertain future event. It is generally recorded in the books only when the amount of liability can be reasonably estimated and the contingency is likely to occur shortly.

Question

A commitment is a legal obligation that does not meet the technical
requirements for recognition as a liability.
O a.
true
O b. false
When taking a physical inventory under the retail method, it is necessary to
know only the quantity of items on hand.
O a. false
b. true

Which of the following companies would be most likely to use the retail
method?
O a. Afarm supply company
O b. Awomen's dress shop
Oc Adealer in heavy machinery
O d. ATVrepair company
A successful credit policy balances an acceptable level of credit losses with
the potential for profit from total credit sales.
Oa. false
Ob. true
stion
Which of the following statements is true about factoring without
recourse?
O a. The fee will be lower than if the factoring were with recourse.
O b. The seller of the receivables is liable upon default of the debtor.
O c. The factor's risk is lower than if the factoring were with recourse.
O d. An example is the use of maior credit cards

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