A Contingent Liability Must Be Recognized If It Is Likely

question 44

True/False

A contingent liability must be recognized if it is likely that a firm will lose a lawsuit filed against it and the amount of the loss can be reasonably estimated.

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Definitions:

Equivalent Units

A concept used in process costing that converts partially completed units into a number of fully completed units, facilitating the calculation of unit costs.

Equivalent Units

A concept in cost accounting used to apportion costs to partially completed goods, based on the amount of work that has been put into those goods.

Conversion Costs

Conversion costs are the combined costs of direct labor and manufacturing overhead that are incurred to convert raw materials into finished goods.

Raw Materials Inventory

The stock of basic materials required in the production process before they are processed.