A Contingent Liability Is a Liability That May Occur If

question 134

True/False

A contingent liability is a liability that may occur if some future event takes place.

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Definitions:

Cost of Goods Sold

Direct financial expenditures related to the generation of a company’s saleable products, covering labor and materials.

Periodic Method

An inventory accounting method where updates to the inventory records are made periodically, typically at the end of the accounting period.

Merchandise Inventory

Goods available for sale, reported as a current asset on a company's balance sheet.

Income Statement

A financial document that reports a company's financial performance over a specific accounting period, detailing revenue, expenses, and profits.