A Contingent Liability Is a Potential Obligation That Depends on a Future

question 146

True/False

A contingent liability is a potential obligation that depends on a future event arising from a future transaction or event.

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Definitions:

Post-closing Trial Balance

A financial statement listing all accounts and their balances after closing entries are made, ensuring that debits equal credits.

Accounting Cycle

The process that begins with analyzing and journalizing transactions and ends with the post-closing trial balance.

Accounting Cycle

The collective process of recording and processing the accounting events of a company, from the initial transaction to the preparation of financial statements.

Analyzing Transactions

The process of examining financial transactions to determine their impact on the financial status of an entity.