Which of the Following Items Results in a Contingent Liability

question 135

Multiple Choice

Which of the following items results in a contingent liability?

• A)Income tax expense
• B)A lawsuit filed against a company
• C)Interest expense
• D)Advertising expense

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Definitions:

LIFO

A inventory valuation method where the last items added to inventory are the first ones sold, standing for "Last In, First Out."

Average Cost

A calculation of the total cost of goods available for sale divided by the total units available for sale, used to compute cost of goods sold in certain inventory valuation methods.

Cost Of Goods Sold

The direct costs attributable to the production of the goods sold in a company.

Periodic Inventory System

An inventory system in which the inventory count and cost of goods sold calculation are performed at specific intervals, typically at the end of an accounting period.