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:

Flotation Costs

Expenses incurred by a company when issuing new securities, such as underwriting fees, legal fees, and registration fees.

Low-Dividend Policy

A strategy where a company distributes a small portion of its earnings in the form of dividends, preferring to reinvest the majority back into the business.

Tax Policy

The laws and regulations governing how taxes are collected and managed by the government, influencing economic behavior and distribution of resources.

Individual Tax Rate

The tax rate applied to an individual's income, which varies depending on income level and filing status, contributing to the progressive taxation system.