The FASB Established the Use of the Terms "Probable," "Reasonably

question 75

Multiple Choice

The FASB established the use of the terms "probable," "reasonably possible," and "remote." It adopted these terms because

• A) the available statistical techniques are not exact enough.
• B) the likelihood of occurrence of future events can vary over a wide range.
• C) future gains are not easy to estimate.
• D) unnecessary estimates should not be recorded in the financial records.

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Definitions:

Profit

The financial gain achieved when the total revenues generated from business activities exceed the total costs and expenses incurred.

Market Value

The ongoing price for the transaction of assets or services within the marketplace.

Interest Rate

The percentage of a sum of money charged for its use, often expressed as an annual percentage rate.

Net Income

The total profit of a company after all expenses and taxes have been deducted from total revenue.