How Is a Contingent Liability Reported If It Is Considered

question 11

Multiple Choice

How is a contingent liability reported if it is considered "reasonably possible?"

• A) The liability may or may not be recorded in the footnotes to financial statements.
• B) The contingent liability should be disclosed in the footnotes to the financial statements.
• C) The liability should be disclosed in the footnotes as well as on the face of the financial statements.
• D) No mention of the liability needs to be made in the financial statements.

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Definitions:

Date Of Record

A specific date set by a company on which the shareholders must be registered to be entitled to dividend payments.

Cum Dividend

A term used to describe a stock that is trading with the right to receive a dividend that has been declared but not yet paid.

Ex-Dividend Date

The specific date on which shares traded no longer come with the right to receive the most recently declared dividend.

Total Wealth

The complete value of an individual's or entity's assets minus liabilities.