A Contingent Liability

question 54

Multiple Choice

A contingent liability

• A)is definite in existence, but its amount and due date are not yet known.
• B)has the same requirements as a contingent gain.
• C)must be accrued even when it is not reasonably estimable.
• D)is disclosed only in the financial statement notes if highly probable and the amount can be estimated.

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Definitions:

Forward Market

A market in which participants agree to trade a financial instrument or physical commodity for future delivery at a specified price.

Absolute Purchasing Power Parity

A theory stating that identical goods and services in different countries should cost the same when priced in a common currency.

Standardized Good

a product that is produced to a set standard, making it interchangeable with similar products.

Economic Values

The worth of goods or services determined by the market, where price represents the quantity of resources people are willing to exchange for it.