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:

Deferred Gross Profit

The portion of gross profit on installment sales that is not recognized immediately but is deferred until cash is received.

Cost Recovery Method

An accounting method where profits are not recognized until all the costs of the goods sold are recovered.

Sales Price

The amount of money for which a product is sold to customers.

Transfer of Risks

The process in contracts where the risk of loss or damage to goods passes from the seller to the buyer.