Which of the Following Statements Is Correct

question 20

Multiple Choice

Which of the following statements is correct?

• A) A provision is a class of liabilities.
• B) A contingent liability is a class of liabilities.
• C) A provision is a class of contingent liabilities.
• D) Contingent liabilities and provisions are classes of liabilities.

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Definitions:

Commercial Paper

An unsecured, short-term debt instrument issued by corporations to finance their immediate operational needs.

Maturity

The stage in a product’s lifecycle or a company’s growth where growth slows down, and it reaches a steady state of maximum output or sales.

Secured

Protected against threat or harm, or in financial terms, backed by collateral.

Venture Capitalist

An investor who provides capital to start-up companies or supports small companies that wish to expand but do not have access to equities markets.