A Basic Difference Between Contingent Liabilities and "Real" Liabilities Is

question 17

Multiple Choice

A basic difference between Contingent Liabilities and "real" liabilities is:

• A) Liabilities stem from past transactions; Contingent Liabilities stem from future events.
• B) Liabilities always are recorded in the accounting records, whereas Contingent Liabilities never are.
• C) The extent of uncertainty involved.
• D) Liabilities can be large in amount, whereas Contingent Liabilities are immaterial.

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Definitions:

Prospectus Approval

The process of getting approval from regulatory authorities for a document offering securities or financial instruments for sale, detailing terms and conditions.

Investment Bank

An organization that assists companies in issuing securities and selling them to investors.

Market

A place or mechanism where buyers and sellers can trade goods, services, securities, or other items of value.

Securities

Financial instruments that represent ownership positions in publicly-traded corporations (stock), creditor relationships with governmental bodies or corporations (bonds), or rights to ownership as represented by an option.