A Contingent Liability Is Recognized When the Amount Can Be

question 159

True/False

A contingent liability is recognized when the amount can be reasonably estimated and the likelihood of loss is probable.

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Definitions:

3/10 Net 30

A payment term indicating that a buyer can deduct 3% of the invoice amount if payment is made within 10 days; otherwise, the full amount is due within 30 days.

Invoice

A document issued by a seller to a buyer, detailing products or services provided, prices, and payment terms.

Markup

The amount added to the cost price of goods to cover overhead and profit, expressed as a percentage of the cost.

Gross Profit

The financial gain obtained after subtracting the cost of goods sold from the total revenue.