This Year Port City Was Sued for Injuries Sustained When

question 3

Multiple Choice

This year Port City was sued for injuries sustained when a citizen slipped and broke her hip on the icy City Hall steps.The City attorney estimates the City will be held liable by the courts and a judgment of $200,000 will result.Because of the nature of the case it will likely be four years before the City makes any payment related to the accident.The present value of the likely future payment is $167,000.In the General Fund, at the end of the current fiscal year, Port City should recognize a liability of

• A)$200,000.
• B)$167,000.
• C)$0 with required note disclosure.
• D)$0 with no required not disclosure.

---

Definitions:

Ledger

A comprehensive collection of all the accounts of a company, showing transactions and resulting balances.

Journal

A book or digital record used in accounting to record each financial transaction as it occurs in chronological order.

Ledger

A book or computer file for recording and totaling economic transactions measured in terms of a monetary unit of account by account type.

Transposition

The accidental rearrangement of digits of a number. Example: 152 → 125.