Under ASPE, a Contingent Liability Is Recorded in the Accounting

question 70

Multiple Choice

Under ASPE, a contingent liability is recorded in the accounting records

• A)if it is likely that a future event will confirm that a liability has been incurred and the amount of the related loss can be estimated.
• B)if the contingency has not already been disclosed in the notes to the financial statements.
• C)if the amount can be estimated, but the possibility of occurrence is remote.
• D)under no circumstances.

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Definitions:

Revenue

The overall earnings accrued from transactions involving goods or services at the heart of a business's primary operations.

Retrospective Approach

The retrospective approach involves revising previously issued financial statements to reflect changes in accounting policy as if the new policy had always been in effect.

Change In Accounting Principle

An adjustment made to the accounting methods used by a company, requiring retrospective restatement of prior financial statements to reflect the new principle.

Disclosure Rules

These are regulations requiring companies to provide full, fair, and timely Disclosure of financial statements and other significant information.