Which of the Following Statements Concerning Contingencies Is Correct

question 85

Multiple Choice

Which of the following statements concerning contingencies is correct?

I. Gain contingencies are recorded if they are probable and reasonably estimable.
II. Unredeemed frequent flyer mileage is an example of a loss contingency.
III. A loss contingency is a form of off-balance sheet financing.
IV. Loss contingencies are not recognized unless there is a greater than 95% chance they will be realized.

• A)I, II, III, and IV
• B)II, III, and IV
• C)II and III
• D)II only

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Definitions:

Lightbulb

A device that emits light when an electrical current passes through it, available in various types for differing lighting applications.

Dead Short

An electrical fault characterized by a direct current path that allows a surge of electrical current, potentially causing damage or fire.

Circuit Resistance

A measure of the opposition that a circuit presents to the flow of electric current, typically expressed in ohms.

Capacitance

The ability of a system to store an electric charge, measured in Farads, and is an electrical characteristic of a capacitor.