A Lawsuit Has Been Filed Against Your Client

question 37

True/False

A lawsuit has been filed against your client.If, in the opinion of legal counsel, the likelihood your client will lose the lawsuit is remote, no financial statement accrual or disclosure of the potential loss is required.

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Definitions:

Risk Of Loss

The potential for an investment or transaction to result in a financial loss.

Negotiable Instrument

A financial document that guarantees the payment of a specific amount of money, either on demand or at a set time, with the payer named on the document.

Contract Silent

A scenario where a contract does not specify terms or conditions regarding a particular aspect or issue.

Voidable Title

A legal term indicating that a transfer of ownership may be declared invalid by a court, typically because of fraud or misrepresentation at the time of transaction.