QuestionAugust 16, 2025

Which of the following financial events could require a commitment? A) Receivables B) Contract modifications C) Services received D) Pending litigation

Which of the following financial events could require a commitment? A) Receivables B) Contract modifications C) Services received D) Pending litigation
Which of the following financial events could require a commitment?
A) Receivables
B) Contract modifications
C) Services received
D) Pending litigation

Solution
4.3(325 votes)

Answer

B) Contract modifications Explanation 1. Identify the nature of each event A commitment is a binding agreement to future actions or payments. Receivables are amounts owed to a company, not commitments. Contract modifications may require new commitments. Services received are completed transactions, not future commitments. Pending litigation may require financial commitments for legal costs. 2. Determine which events involve future obligations Contract modifications often involve changes that could lead to future obligations or commitments. Pending litigation might also require setting aside funds for potential liabilities.

Explanation

1. Identify the nature of each event<br /> A commitment is a binding agreement to future actions or payments. Receivables are amounts owed to a company, not commitments. Contract modifications may require new commitments. Services received are completed transactions, not future commitments. Pending litigation may require financial commitments for legal costs.<br /><br />2. Determine which events involve future obligations<br /> Contract modifications often involve changes that could lead to future obligations or commitments. Pending litigation might also require setting aside funds for potential liabilities.
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