If a Loss Contingency Related to a Lawsuit Against a Firm

question 94

Multiple Choice

If a loss contingency related to a lawsuit against a firm is deemed to have a reasonable probability of requiring ultimate payment, then the proper accounting treatment of the loss contingency will

• A)require note disclosure.
• B)decrease the debt/asset ratio.
• C)increase the accounts payable/sales ratio.
• D)decrease the debt/equity ratio.

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Definitions:

Applied Behavioral Analysis

A therapy based on understanding and improving specific behaviors, often used for individuals with autism.

Scheme

A systematic plan of action designed to achieve a specific goal.

Organized Patterns

Predetermined or structured ways in which elements are arranged, leading to predictable outcomes.

Situation

The set of all external and internal factors that are present at a given time and place, influencing an individual's actions and decisions.