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Sagot :
The present value of the future outflow should be considered, in theory, when recording liabilities on a balance sheet. Hence the correct response for this question is option (b).
What is a balance sheet?
A balance sheet is nothing but a financial statement that shows a company's assets, liabilities, and shareholder equity at a specific point in time. It serves as the basis to determine investor return rates as well as evaluating a company's financial structure.
A balance sheet has several advantages, including determining risk regardless of the size of a firm or the sector in which it works. This financial statement covers all assets and liabilities for a corporation. A business will be able to determine in a timely manner whether it has taken on too much debt, whether the liquidity of its assets is inadequate, or whether it has enough cash on hand to cover immediate needs.
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The complete question is given below :
When reporting liabilities on a balance sheet, in theory, what measurement should be used?
a. Present value of the present outflow
b. Present value of the future outflow
c. Future value of the present outflow
d. Future value of the future outflow
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