Question

A liability for compensated absences is

A. accrued under all conditions.
B. disclosed in a note only.
C. accrued only if specific conditions are met.
D. never accrued but may be disclosed if desired.

Answer 1

The correct answer is C. accrued only if specific conditions are met. A liability for compensated absences refers to the amount of money a company owes to its employees for time off, such as vacation or sick days. The liability is recognized and accrued when it is probable and can be reasonably estimated.

Step-by-step explanation:

The correct answer is C. accrued only if specific conditions are met.

A liability for compensated absences refers to the amount of money a company owes to its employees for time off, such as vacation or sick days. According to accounting principles, a liability is recognized and accrued when it is probable that the benefit (compensated absence) will be used by employees, and the amount can be reasonably estimated.

For example, if a company has a policy that allows employees to carry forward unused vacation days to the next year, the liability for those carried-forward days would be accrued because the specific conditions for compensation are met.