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What are the objectives of verification of liabilities? (i) to ensure the existence of a Liability (ii) to ensure the ownership (iii) to ensure proper valuation (iv) to ensure the obligation

What are the objectives of verification of liabilities? (i) to ensure the existence of a Liability (ii) to ensure the ownership (iii) to ensure proper valuation (iv) to ensure the obligation Correct Answer (ii), (iii) and (iv)

The correct answer is ​(ii), (iii) and (iv)

Key Points

  • Liability: A liability is something (usually a sum of money) which a business enterprise owes to the outside parties. Liabilities are legal obligations of the organization to third parties. For Example- Bills payable, creditors, loans, etc
  • Liability verification is just as crucial as asset verification. 

Important Points

Objectives of Liability Verification:

  • Liabilities are properly disclosed.
  • Liabilities are properly valued.
  • The ownership of liabilities is properly recognized.
  • The obligation of the liability must be ensured.
  • Liabilities are properly classified and presented in the Balance Sheet.

Related Questions

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