Cash payments made to liquidate an obligation.

Cash payments made to liquidate an obligation.

• A. Time
• B. Amount
• C. Expenditures
• D. Obligations

Answer: (C)

It’s about identifying the term that describes cash outlays to settle a liability. When cash is paid to liquidate an obligation, that cash outflow is recorded as expenditures, because expenditures represent the actual outlay of resources to satisfy a liability. Time would only indicate when the payment happens, and amount only states how much is paid, not the act of paying. Obligations are the commitments or liabilities before payment, not the act of disbursement. So the best fit for cash payments to settle an obligation is expenditures.

It’s about identifying the term that describes cash outlays to settle a liability. When cash is paid to liquidate an obligation, that cash outflow is recorded as expenditures, because expenditures represent the actual outlay of resources to satisfy a liability. Time would only indicate when the payment happens, and amount only states how much is paid, not the act of paying. Obligations are the commitments or liabilities before payment, not the act of disbursement. So the best fit for cash payments to settle an obligation is expenditures.