characteristics of a liability?

[kakar0t]

What did you guys say?

[Akirus]

You serious? This is a textbook question.

A liability is a present obligation of the entity arising from past events, the settlement of which is expected to result in an outflow of resources embodying economic benefits.

[Stormer]

Placing it as 3 separate points was confusing. I didn't know how to separate them so I just did the whole sentence in the box.

[LFTM]

1. obligation of the business
2. arises from past transactions
3.economic benefits are expected to flow out of the entity

is this right?

some of my friends listed qualitative characteristics. i was like...err...

[99.95]

1. present obligation arising from past events
2. reduction in owner's equity
3. outflow of economic benefits

i think....

[Akirus]

1. present obligation arising from past events
2. reduction in owner's equity
3. outflow of economic benefits

i think....

No. You mixed the definition of expense with liability.

Point 1: present obligation of the entity
Point 2: result/arising from past events/transactions
Point 3: when settled, will result in an outflow of economic benefits

[Stormer]

1. present obligation arising from past events
2. reduction in owner's equity
3. outflow of economic benefits

i think....

2nd statement is incorrect

[kakar0t]

i wrote

1. future obligation of a business
2. the settlement of which will result in an outflow of future economic benefit
3. arising from past transactions

hope i'll get all marks

[99.95]

1. present obligation arising from past events
2. reduction in owner's equity
3. outflow of economic benefits

i think....

isnt what u said exactly what i said....

No. You mixed the definition of expense with liability.


what u said is exactly what i said

Point 1: present obligation of the entity
Point 2: result/arising from past events/transactions
Point 3: when settled, will result in an outflow of economic benefits

[Stormer]

It does not reduce owner's equity.

[Akirus]

1. present obligation arising from past events
2. reduction in owner's equity
3. outflow of economic benefits

i think....

isnt what u said exactly what i said....

No. You mixed the definition of expense with liability.


what u said is exactly what i said

Point 1: present obligation of the entity
Point 2: result/arising from past events/transactions
Point 3: when settled, will result in an outflow of economic benefits

Alright, sure.

[Akirus]

i wrote

1. future obligation of a business
2. the settlement of which will result in an outflow of future economic benefit
3. arising from past transactions

hope i'll get all marks

That's right.

[99.95]

will i at least get 2 marks?

[Stormer]

Yeah, you have 3 correct points but you have an incorrect one also.

[mojomojo]

i wrote

1. future obligation of a business
2. the settlement of which will result in an outflow of future economic benefit
3. arising from past transactions

hope i'll get all marks

Yeah same, i wrote that as well.

The thing is that the teacher has been teaching us that the definition of a liability is "Present obligation of the entity which an outflow of economic benefit is expected". It does not have the "result from past event" part, but however i read that from practice exams and text book which have that part.