All of the following statements related to estimated liabilities are true except:

A) Are a known obligation of an uncertain amount that can be reasonably estimated.
B) Include vacation benefits or paid absences.
C) Depends on the likelihood that a future event will occur.
D) Entry to record includes a debit to an expense account and credit to a payable account.
E) Can be both current and long term.

Question

Vrinda Kabrawala · Accepted Answer

Final Answer : C, Explanation :  Estimated liabilities are obligations whose amount or timing is uncertain but can be reasonably estimated, not directly dependent on the likelihood of a future event occurring. They include obligations like vacation benefits and can be recorded as both current and long-term, with the typical journal entry involving a debit to an expense account and a credit to a payable account.

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