Question

Ways in which a settlement of a present obligation can occur : a) Payment in cash

b) Transfer of other assets
c) Incurrence of new liabilities
d) Conversion of an obligation to equity

Answer 1

Payment in cash, transfer of other assets, incurrence of new liabilities, and conversion of an obligation to equity are ways in which a present obligation can be settled.

Step-by-step explanation:

Settlement of a present obligation can occur in several ways:

1. Payment in cash: The most common way to settle an obligation is by making a cash payment. For example, if a person owes money to a creditor, they can settle the debt by paying the amount owed in cash.
2. Transfer of other assets: Another option is to settle an obligation by transferring assets. For instance, if a company owes a supplier money, they may settle the debt by transferring goods or services of equal value.
3. Incurrence of new liabilities: Sometimes, an obligation can be settled by taking on new liabilities. For example, a company may have a debt obligation that can be settled by borrowing money from another source.
4. Conversion of an obligation to equity: Lastly, an obligation can be settled by converting it to equity. This means that instead of paying cash or transferring assets, the debtor issues shares of stock to the creditor.