A Contingent Liability Is a Liability That May Materialize in the Future

question 9

True/False

A contingent liability is a liability that may materialize in the future because of something that happened in the past.

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Definitions:

Dividends

Disbursements by a company to its stockholders, often as a profit-sharing mechanism.

Obligations

Legal or financial duties that one party is bound to perform for another, such as the repayment of a loan.

Investing Section

A part of the cash flow statement that shows cash flows from the acquisition and disposal of long-term investments and fixed assets.

Operating Section

In the context of financial reporting, this term specifies the portion of the cash flow statement that deals with cash flows from operational activities.