Which of the Following Circumstances Would Require Recording an Accrual

question 41

Multiple Choice

Which of the following circumstances would require recording an accrual for a loss contingency under current generally accepted accounting principles?

• A) Event is unusual in nature and occurrence of event is probable
• B) Event is unusual in nature and event occurs infrequently
• C) Amount of loss is reasonably estimable and occurrence of event is probable
• D) Amount of loss is reasonably estimable and event occurs infrequently

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Definitions:

Market Economy

An economic system in which economic decisions and the pricing of goods and services are guided solely by the interactions of citizens and businesses.

Equilibrium Quantity

At the market equilibrium price, the amount of goods or services that are supplied matches the amount that is demanded.

Equilibrium Price

A pricing point in the market where the supply of goods meets the demand for those goods.

Equilibrium Quantity

The quantity of goods or services that is supplied and demanded at the equilibrium price, where supply equals demand in a market.