An agreement that commits the firm to a set of fixed conditions in the future regardless of what happens to profits or the economy as a whole is a definition of a
A)contingent liability.
B)potentially hazardous agreement.
C)commitment.
D)conditional contract.

Question

Quizplus · Accepted Answer

A commitment is a promise to do something in the future that binds the firm, regardless of any changes in profits or the economy. It is an obligation that the firm has made to another party to follow through on certain conditions or terms. A contingent liability refers to a potential future obligation that depends on an uncertain event, while a potentially hazardous agreement is a contract that involves a significant risk to the firm. A conditional contract contains terms that only take effect if certain conditions occur.

An Agreement That Commits the Firm to a Set of Fixed