A Contingent Liability Should Be Entered into the Accounting Records

question 11

True/False

A contingent liability should be entered into the accounting records if it is both probable and reasonably estimable.

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Definitions:

Insolvent

Refers to the condition of an individual or entity that cannot pay its debts when they are due.

Serve Process

The procedure by which a party to a lawsuit gives an appropriate notice of initial legal action to another party (defendant or respondent) in order to exercise jurisdiction over that person.

Admission

The process of being accepted into an organization or institution, or the acknowledgment of a fact or truth.

Statute of Frauds

A rule of law mandating that specific contract categories must be documented and signed in order to be legally binding.