Contingent Assets Need Not Be Disclosed in the Financial Statements

question 121

Multiple Choice

Contingent assets need not be disclosed in the financial statements or in the notes if they are:

• A) virtually certain to occur.
• B) probable to occur.
• C) likely to occur.
• D) possible but not probable to occur.

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Definitions:

Cost of Goods Sold

The total cost directly attributed to the production of goods sold by a company, including materials and labor costs but excluding indirect expenses.

Operating Expenses

Costs associated with a company's main operational activities, excluding the cost of goods sold.

Merchandising Companies

Companies that buy and sell goods without fundamentally changing their condition; they are involved in retail or wholesale.

Merchandising Company

A business that purchases finished goods for resale, earning revenue from the difference between the retail and wholesale prices.