D1 One of the prime determinants of the content and format of the balance sheet is: the amount of liabilities the entity has. whether the entity is about to apply for a loan from a bank. the structure of the entity. the level of profit the entity generated for the period. D2 The present obligation to make a sacrifice that is an essential criteria of the definition of a liability under the IASB ConceptualFramework: may arise out of moral or constructive obligations. can only arise from legal obligations. may vary in different countries. meets the definition of an expense. 3 A law firm received $2,000 cash for legal services to be provided in the future. The full amount was credited to the lisbity account Revenue Received in Advance. If the legal services have been provided at the end of the accounting period and no adjusting entry is made, this would cause: revenues to be understated. labilities to be understated. profit to be overstated expenses to be overstated. 4 On Friday 26 January Snell Tables paid employee wages up to the end of that day. The next payroll will be paid in February. There are three more working days in January (29-31). Employees work 5 days a week and the business pays $800 a day in wages. The adjusting entry to accrue wages expense at the end of January is: Dr. Wages Expense 4,000, Cr. Wages Payable 4,000 Dr. Wages payable $2,400, Cr. Wages expense $2,400 Dr. Wages Expense 800, C. Wages Payable 800 Dr. Wages Expense 2,400, CI Wages Payable 2,400