The Key Characteristic of Contingent Liabilities Is

question 21

Multiple Choice

The key characteristic of contingent liabilities is:

• A) a legal dispute must exist at balance date.
• B) the liability does not exist beyond a reasonable doubt.
• C) the liability will be confirmed only by the occurrence or non-occurrence of a future event not completely within the control of an entity.
• D) the timing of the future sacrifice of economic benefits is uncertain.

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Definitions:

Initial Growth Period

The phase in a business or project's life cycle characterized by a rapid expansion in revenue and customer base, often necessitating significant investment in marketing and capacity.

Constant Growth Period

The constant growth period refers to a phase in which a company or financial asset's dividends or earnings grow at a steady, unchanging rate.

Preemptive Right

Gives the current shareholders the right to purchase any new shares issued in proportion to their current holdings. The preemptive right enables current owners to maintain their proportionate share of ownership and control of the business.

Proxy Fight

An attempt to take over a company in which an outside group solicits existing shareholders’ proxies, which are authorizations to vote shares in a shareholders’ meeting, in an effort to overthrow management and take control of the business.