When the Amount of a Contingent Liability Can Be Estimated

question 59

Multiple Choice

When the amount of a contingent liability can be estimated and its likelihood is probable, the company should:

• A) include a description in the footnotes to the financial statements.
• B) record the estimated amount of the liability times the probability of its occurrence.
• C) record the estimated amount of the liability on the balance sheet.
• D) omit the information about the contingent liability from its financial statements and footnotes.

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Definitions:

Single-Factor ANOVA

A statistical technique used to compare the means of three or more samples using variance analysis on a single independent variable.

Test Statistic

A calculated value used in statistical hypothesis testing to determine whether to reject the null hypothesis.

Squares

In statistics, refers to the process of squaring each difference between individual data points and the mean, used in the calculation of variance and standard deviation.

One-Way ANOVA

A statistical test that compares the means of three or more independent groups to determine if there is a statistically significant difference between them, based on one independent variable.