Conboy Corporation Disclosed in the Notes to Its Financial Statements

question 16

Multiple Choice

Conboy Corporation disclosed in the notes to its financial statements that a significant number of its unsecured trade account receivables are with companies that operate in the same industry. This disclosure is required to inform financial statement users of the existence of

• A) Concentration of market risk.
• B) Risk of measurement uncertainty.
• C) Off-balance sheet risk of accounting loss.
• D) Concentration of credit risk.

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Definitions:

Dividends

Payments made by a corporation to its shareholder members, usually distributed from the company's profits.

Liquidation

Occurs when a business is terminated, the assets are sold, and liabilities and partners are paid off.

Creditors

Entities or individuals to whom a company owes money or has financial liabilities, often in the context of short or long-term borrowing.

Contract Rate

Rate of interest (based on face value) stated on bond certificate and bond indenture.