Which of the Following Would NOT Be Shown as a Contingent

question 6

Multiple Choice

Which of the following would NOT be shown as a contingent liability?

• A) Estimated future cost of providing superannuation for work already carried out by employees
• B) A dispute with the taxation department where legal advice suggests that the company will win the dispute
• C) A company providing a guarantee to a lender for a loan taken out by a subsidiary company where a default on the loan is very unlikely
• D) A company defending a claim for unspecified damages where the amount of the claim cannot be reliably measured

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Definitions:

Flexible Production Lines

Manufacturing setups that can quickly be adapted to produce different products or adjust production volumes in response to market demands.

Production Rate

The speed or efficiency at which goods are manufactured or services are delivered within a specified period.

Supply of Product

The total amount of a product or service that is available for purchase at any given time.

Capacity

The maximum level of output that a company can sustain to produce a product or service.