A Contingent Liability Is an Obligation to Make a Future

question 69

True/False

A contingent liability is an obligation to make a future payment if an uncertain future event occurs.

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Definitions:

Treasury Stock

Shares that were once outstanding but have been bought back by the issuing company, reducing the amount of stock on the open market.

Balance Sheet

A financial statement summarizing a company's assets, liabilities, and shareholders' equity at a specific point in time.

Retained Earnings

The portion of net income left over for the business after it has paid out dividends to its shareholders.

Contributed Capital

The capital that shareholders contribute to a company beyond the par value of the shares they purchase.