Contingent Liabilities Must Be

question 28

Multiple Choice

Contingent liabilities must be:

• A) material and imminent, or they should not even be mentioned.
• B) disclosed in the footnotes.
• C) recorded on the balance sheet between current and long- term liabilities.
• D) recorded in the ledger, or no disclosure is required.

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Definitions:

Allowance for Doubtful Accounts

A contra-asset account on the balance sheet, estimating the amount of receivables that are expected to be uncollectible.

Uncollectible Accounts Receivable

Debts owed to a company that are considered unlikely to be recovered, often due to the debtor's inability to pay.

Debit Balance

An accounting entry that represents a situation where debits are greater than credits in an account, often indicating assets or expenses.

Allowance for Doubtful Accounts

A contra-asset account that reduces the total receivables balance to reflect accounts that may not be collectible.