If a Contingency Is Remote,the Company Does Not Need to Record

question 143

True/False

If a contingency is remote,the company does not need to record a liability and does not need to disclose it in the notes to the financial statements.

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Definitions:

Sales Growth Expectations

Anticipations or forecasts about the future increase in sales revenue over a specified period.

Sustainable Growth Rate

The maximum rate at which a company can grow its sales, earnings, and dividends without increasing its equity and while maintaining its existing debt-equity ratio.

Debt-Equity Ratio

A calculation to determine a business's leverage by dividing its liabilities by the equity of its stockholders.

External Equity Financing

This term refers to the process through which a company raises capital by selling its shares to external investors, outside the existing shareholders or company insiders.