When the Occurrence of a Liability Is Dependent on the Outcome

question 77

Multiple Choice

When the occurrence of a liability is dependent on the outcome of some future event, the liability is referred to as a(n)

• A) commitment.
• B) accrued liability
• C) contingent liability.
• D) accounts payable.

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Definitions:

Special Order

A one-time order that is not considered part of the company's normal ongoing operations, often requiring special pricing or terms.

Incremental Analysis

An examination of the additional benefits of an activity compared to the additional costs incurred by that same activity.

Lost Sales

Potential sales that were not realized due to stockouts, capacity issues, or other factors that prevented the completion of a sale.

Special Order

An order placed by a customer that requires a company to make a product with specifications that differ from their standard product line.