The Journal Entry to Record a Contingent Liability Creates an Accrued

question 62

True/False

The journal entry to record a contingent liability creates an accrued liability on the balance sheet and a loss on the income statement.

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Definitions:

Marginal Revenue

The additional income generated from selling one more unit of a product or service.

Marginal Cost

The rise in expense associated with manufacturing an extra unit of a product or service.

Shut Down

A short-term decision by a company to cease operations temporarily due to unfavorable market conditions or to minimize losses when variable costs exceed total revenues.

Maximizes Profit

The strategy or process implemented to increase the difference between total revenue and total costs to the highest possible amount.