Asked by Nichole Stone on May 20, 2024
Verified
If a liability is dependent on a future event it is called a
A) potential liability.
B) hypothetical liability.
C) probabilistic liability.
D) contingent liability.
Contingent Liability
A potential financial obligation depending on the outcome of future events, not yet confirmed as a liability.
Future Event
A future event is an occurrence or situation that is expected or anticipated to happen at a later date, which can impact financial planning and decisions.
- Familiarize oneself with the accounting and reporting protocols for contingent and estimated liabilities.
Verified Answer
SS
Samantha SomaiMay 23, 2024
Final Answer :
D
Explanation :
A contingent liability is a liability that depends upon the outcome of a future event. This means that it may or may not actually become a real liability in the future. Examples of contingent liabilities include pending lawsuits or potential warranty claims on products sold. Therefore, choice D is the correct answer.
Learning Objectives
- Familiarize oneself with the accounting and reporting protocols for contingent and estimated liabilities.