A Contingency Need Not Be Recorded nor Disclosed When

question 108

Multiple Choice

A contingency need not be recorded nor disclosed when

• A) it is probable the contingency will happen and the amount can be reasonably estimated.
• B) it is probable the contingency will happen but the amount cannot be reasonably estimated.
• C) it is reasonably possible the contingency will happen and the amount can be reasonably estimated.
• D) the possibility of the contingency happening is remote.

---

Definitions:

Credit

An accounting entry representing an increase in assets or decrease in liabilities, and is also commonly used to refer to the provision of funds based on a trust agreement.

Transactions

The exchange of goods, services, or funds between two or more parties, forming the basis for recording in financial accounts.

Ledger

A comprehensive collection of a company's accounts, in which transactions are recorded from the journal and summarized, showing current balances.

Net Income

The net income of a business once all costs and taxes are subtracted from its revenues.