A Contingent Liability

question 4

Multiple Choice

A contingent liability

• A)definitely exists as a liability but its amount and due date are indeterminable.
• B)is accrued even though not reasonably estimated.
• C)is the result of a loss contingency.
• D)is not recognized in the financial statements.

---

Definitions:

Zero-Based Budgeting

A budgeting method where all expenses must be justified for each new period, starting from a "zero base," rather than just adjusting previous budgets.

Cash Budget

An estimate of cash inflows and outflows over a specific period, used to manage and plan for cash needs.

Minimum Cash Balance

The lowest amount of cash that a company aims to maintain in its accounts to adequately meet its operational and financial obligations.

Borrowing

The act of obtaining funds from a lender under the agreement to pay back the principal amount along with interest or other charges.