Potential Liabilities That Depend on Future Events Arising Out of Past

question 108

Multiple Choice

Potential liabilities that depend on future events arising out of past events are called:

• A)long- term liabilities.
• B)estimated liabilities.
• C)actual liabilities.
• D)contingent liabilities.

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Definitions:

Zero Balances

Accounts in financial statements that have no outstanding balance or value at a given point in time.

Closing Entries

Journal entries made at the end of an accounting period to transfer the balances in temporary accounts to permanent accounts, preparing the books for the next accounting period.

Adjusting Entries

Entries in the books of accounts made during the final part of an accounting cycle to distribute profits and costs to their rightful period.

Closing Entries

Journal entries made at the end of an accounting period to transfer temporary account balances to permanent accounts.