Which of the Following Is TRUE of a Contingent Liability

question 60

Multiple Choice

Which of the following is TRUE of a contingent liability?

• A)It is a liability resulting from a lawsuit settled in court.
• B)It is an actual liability that depends on a past event.
• C)It is an actual liability that is difficult to estimate.
• D)It is a potential liability that depends on a future event.

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Definitions:

Competitors

Other businesses or individuals that offer similar products or services within the same market.

Variable Costs

Costs that change in proportion with the level of output or activity.

Fixed Costs

Costs that do not change with an increase or decrease in the amount of goods or services produced or sold.

Corporate Tax Rate

The percentage of a company's taxable income that it pays to federal, state, or local tax authorities.