Three Conditions Are Required for a Contingent Liability to Exist

question 94

Multiple Choice

Three conditions are required for a contingent liability to exist. Which of the following is not one of those conditions?

• A) There is a potential future payment to an outside party or the impairment of an asset that resulted from an existing condition.
• B) The outcome must be resolved by a third-party.
• C) There is uncertainty about the amount of the future payment or impairment.
• D) The outcome will be resolved by some future event or events.

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Definitions:

Fire Protection

A range of measures and services designed to minimize the impact of fire on people, property, and the environment.

Private Good

A good that is both excludable and rival in consumption.

Ice-Cream Cone

A sweet frozen dessert made from dairy and sugar, often served in a cone-shaped pastry or wafer.

Artificially Scarce Good

A good that is excludable but nonrival in consumption.