No Disclosure in the Financial Statement Is Necessary If the Contingent

question 22

Multiple Choice

No disclosure in the financial statement is necessary if the contingent liability is:

• A) Remote.
• B) Probable.
• C) Reasonably possible.
• D) Has occurred.

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Definitions:

Materials Quantity Variance

A financial measure that captures the difference between the actual amount of materials used in production and the standard amount expected, multiplied by the standard cost of those materials.

Variable Overhead Rate Variance

The difference between the actual overhead rate incurred and the standard overhead rate that was expected, multiplied by the actual hours worked.

Direct Labor-Hours

The total hours worked by employees directly involved in the production process, used as a basis for allocating manufacturing overhead.

Standard Ounces

A measure used to standardize the weight of precious metals like gold and silver, commonly set at one troy ounce.