Which of the Following Statements Best Describes a Contingent Liability

question 144

Multiple Choice

Which of the following statements best describes a contingent liability?

• A)The amount of a contingent liability is known and will definitely have to be paid in the future.
• B)A contingent liability is a potential liability that has arisen because of a past transaction or event,but its ultimate outcome will not be known until a future event occurs or fails to occur.
• C)A contingent liability will only be incurred if a particular future event takes place.
• D)A contingent liability is a potential liability that will be incurred if a natural disaster happens.

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Definitions:

Planning

The process of outlining business goals, strategies, and actions to achieve desired outcomes.

Controlling

The process of monitoring and adjusting plans and strategies to ensure goals and objectives are achieved within an organization.

Direct Labor

The pay awarded to employees who are directly part of manufacturing goods or delivering services.

Raw Materials Conversion

This process involves transforming raw materials into components or products through manufacturing or production processes.