Which of the Following Statements Best Describes a Contingent Liability

question 144

Multiple Choice

Which of the following statements best describes a contingent liability?

• A)The amount of a contingent liability is known and will definitely have to be paid in the future.
• B)A contingent liability is a potential liability that has arisen because of a past transaction or event,but its ultimate outcome will not be known until a future event occurs or fails to occur.
• C)A contingent liability will only be incurred if a particular future event takes place.
• D)A contingent liability is a potential liability that will be incurred if a natural disaster happens.

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Definitions:

Aggregate Supply Curve

A graphical representation showing the relationship between the total production of goods and services in an economy and the overall price level.

Price Index

An average that measures the change in prices paid by consumers for goods and services over time, indicating inflation or deflation.

GDP

Gross Domestic Product, a measure of the economic performance of a country, indicating the total value of all goods and services produced over a specific time period.

Price Index

A measure that examines the weighted average of prices of a basket of consumer goods and services, used to estimate inflation.