When Testing for Contingent Liabilities, the Primary Objective at the Initial

question 70

True/False

When testing for contingent liabilities, the primary objective at the initial stage of the tests is to determine the existence of contingencies.

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Definitions:

Operating Activities

Activities directly related to the primary business operations, including the production, distribution, and sale of goods or services.

Free Cash Flow

A measure that assesses a company’s ability to fund its capital expenditures and dividends from its net cash provided by operating activities.

Generated Enough Cash

Refers to a situation where a business's operations have produced sufficient cash flow to cover its expenses and investment activities.

Capital Expenditures

Capital utilized by a corporation to purchase, improve, and manage tangible assets including real estate, manufacturing facilities, or machinery.