The Journal Entry to Record a Contingent Liability Requires a Debit

question 84

True/False

The journal entry to record a contingent liability requires a debit to a loss (or expense)account and a credit to a liability.

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Definitions:

High Flotation Costs

The expenses incurred by a company in issuing new securities, typically including underwriting, legal, and registration fees, which can be higher for smaller issues.

Positive NPV Projects

Investment opportunities where the net present value (NPV) is greater than zero, indicating that they are expected to generate a profit.

High Dividend Payout

The practice of distributing a large portion of a company's earnings to its shareholders in the form of dividends.

Distribution

The process of allocating assets, earnings, or dividends among shareholders, or the spread of investments within a portfolio.