Which of the Following Is an Example of a Contingent

question 129

Multiple Choice

Which of the following is an example of a contingent liability?

• A) A corporate long-term employment contract with the chief executive officer.
• B) A lawsuit pending against a restaurant chain for improper preparation of food.
• C) A liability for notes payable with interest included in the face amount.
• D) The liability for future warranty repairs on computers sold during the current period.

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Definitions:

Arithmetic Operations

Basic mathematical operations such as addition, subtraction, multiplication, and division.

Exponential Growth

A pattern of data that shows greater increases over time, following a mathematical model where growth rate is proportional to the current value.

Compound Interest

Interest computation method where both the beginning principal and the accumulated interest from past terms are considered.

Exponential Growth

Growth at a rate that becomes ever more rapid in proportion to the growing total number or size.