The Key Characteristic of Contingent Liabilities Is

question 21

Multiple Choice

The key characteristic of contingent liabilities is:

• A) a legal dispute must exist at balance date.
• B) the liability does not exist beyond a reasonable doubt.
• C) the liability will be confirmed only by the occurrence or non-occurrence of a future event not completely within the control of an entity.
• D) the timing of the future sacrifice of economic benefits is uncertain.

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Definitions:

Existing Promise

A commitment or agreement already in place, often referring to contractual obligations.

Existing Promisor

A party in a contractual agreement who has previously committed to perform a specific duty or obligation.

Contractual Promises

Commitments made within a contract that are binding and enforceable by law, requiring parties to perform or refrain from certain actions.

Absolute Promises

Unconditional commitments made by one party to another, requiring full performance without contingencies or reliance on future events.