For a liability to exist, the payee must be identified.Group of answer choicesTrueFalse

True or False Statement Analysis

1. Break Down the Problem
   The statement indicates that for a liability to exist, the payee must be identified. This involves understanding the concept of liabilities in accounting.

2. Relevant Concepts
   In accounting, a liability is a present obligation of the entity to transfer an economic resource as a result of past events. The identification of the payee is crucial in this scenario because a liability typically involves a specific party to whom the obligation is payable.

3. Analysis and Detail

   • If a liability were to exist without a clear payee, it would be difficult to ascertain the nature and amount of the obligation.
   • Furthermore, including a payee in a liability ensures proper record-keeping and accountability.

4. Verify and Summarize
   To summarize, the identification of the payee is essential for recognizing a liability in accounting practices as it clarifies whom the obligation is owed.

Final Answer

True - For a liability to exist, the payee must be identified.