Question

What are the obligations or debts that a business must pay in cash or in goods and services at some future time because of past transactions or events called and how are they reported?

1. Dividends on the statemet of retained earnings
2. Liabilities on the balance sheet
3. Stockholders' equity on the balance sheet
4. Assets on the balance sheet

Answer 1

2) Liabilities on the balance sheet

Step-by-step explanation:

Liabilities are defined as potential outflow of economic benefits either in the form of cash or goods and services as a result of any past event that has already occurred. Liabilities are reported on balance sheet either as current liabilities (if payable within a year) or non-current liabilities (if payable after one year).

Dividends on the statement of retained earnings are reported when board of directors / owners approve the distribution of profit to shareholders.

Stockholders equity on balance sheet is reported to denote net residual interest of owners after deduction all liabilities and obligations.

Assets on balance sheet denote the economic benefits that are expected to flow to the Company.