Which of the Following Statements Best Describes a Contingent Liability

question 144

Multiple Choice

Which of the following statements best describes a contingent liability?

• A)The amount of a contingent liability is known and will definitely have to be paid in the future.
• B)A contingent liability is a potential liability that has arisen because of a past transaction or event,but its ultimate outcome will not be known until a future event occurs or fails to occur.
• C)A contingent liability will only be incurred if a particular future event takes place.
• D)A contingent liability is a potential liability that will be incurred if a natural disaster happens.

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Definitions:

Arable Land

Land capable of being ploughed and used to grow crops, indicating a measure of a region’s ability to support agricultural activities.

Cash Crops

Agricultural products grown primarily for sale to return a profit, such as tobacco, cotton, and sugar, rather than for consumption by the farmer's family.

Grain Production

involves the farming of grains such as wheat, corn, and rice, which are staple foods for a large portion of the world’s population.

Body Servants

Enslaved or servant individuals who worked closely with their masters or mistresses, performing personal tasks such as dressing, bathing, and grooming; these roles often, but not exclusively, existed within the context of slavery.