A Contingent Liability Is a Potential Obligation That Depends on a Future

question 204

True/False

A contingent liability is a potential obligation that depends on a future event arising from a past transaction or event.

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Definitions:

Cash Dividends

Payments made by a corporation to its shareholder members. It is the share of profits distributed in the form of cash.

Direct Method

A way of preparing cash flow statements where actual cash inflows and outflows from operational activities are listed.

Selling Expenses

Costs incurred directly and indirectly in making sales, including commissions, advertising, and salaries of sales staff.

Administrative Expense

Overhead or general expenses related to the day-to-day running of a business but not directly tied to production.