A Contingent Liability

question 98

Multiple Choice

A contingent liability

• A) Is another name for a long-term liability
• B) Only arise when accounts receivable are factored
• C) Arise when a note receivable is discounted without recourse
• D) Is an obligation to make a future payment if a certain future event occurs
• E) Is an obligation to make a future payment if an uncertain future event occurs

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Definitions:

Duress

A condition where a person performs an act as a result of violence, threat, or other pressures against them, undermining their free will.

Privity of Contract

A legal doctrine stating that only parties involved in a contract are entitled to enforce it or be sued under it.

Royal Bank

Typically refers to a bank that has been granted a royal charter, recognizing it as a privileged financial institution.

Equitable Assignment

An equitable assignment is the assignment or transfer of rights or interests in a property or contract to another party, recognized by equity and not necessarily by law.