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

question 146

True/False

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

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Definitions:

Proportion

A segment, piece, or amount looked at in relation to the entirety.

Acid-test Ratio

A financial metric that measures a company's ability to pay off its current liabilities with its quick assets, providing insight into its short-term liquidity without relying on inventory assets.

Current Liabilities

Short-term financial obligations that are due within one year or within the normal operating cycle of the business, whichever is longer.

Inventory

Inventory consists of goods and materials a business holds for the ultimate purpose of sale, production, or utilization.