Gain Contingencies

question 92

Multiple Choice

Gain contingencies

• A)should be accrued when probable and the amount can be reasonably estimated.
• B)are reported as revenues on the income statement.
• C)should be accrued for anticipated lottery winnings.
• D)are almost never accrued and are rarely disclosed.

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Definitions:

Long-term Sales

Transactions or sales contracts that are expected to be fulfilled over an extended period of time.

Fixed Costs

Costs that do not vary with the volume of production or sales, such as rent, salaries, and insurance premiums, contributing to a company's overhead.

Special Orders

Orders that are outside the normal scope of products or services offered by a business, often requiring special pricing, terms, or conditions.

Absorption Costing

An accounting method that includes all of the direct and indirect manufacturing costs in the cost of a product.