Accounting for Contingent Liabilities Covers Three Categories

question 119

True/False

Accounting for contingent liabilities covers three categories.(1)The future event is probable and the amount cannot be reasonably estimated.(2)The future event is remote or unlikely to recur.(3)The likelihood of the liability to occur is impossible.

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Definitions:

Bretton Woods System

A monetary management system established in 1944 which set up fixed exchange rates for major currencies, with the US dollar convertible to gold, and led to the creation of the IMF and World Bank.

Fixed Exchange Rates

A system where the value of a currency is pegged to another currency, a basket of currencies, or a commodity such as gold, and does not fluctuate in the foreign exchange market.

Gold Standard

A monetary system in which the standard unit of currency is based on a fixed quantity of gold, ensuring stability and trust in currency value.

Balance of Trade Deficit

A Balance of Trade Deficit occurs when a country's imports of goods and services exceed its exports, indicating that more money is flowing out of the country to buy foreign goods than is coming in from the sale of domestic goods.