Liabilities That Exist but Whose Exact Amount Is Not Known

question 55

Multiple Choice

Liabilities that exist but whose exact amount is not known must be:

• A)ignored.
• B)estimated.
• C)reported in the notes to the financial statements.
• D)treated as a contingent liability.

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Definitions:

Equilibrium

A state in which market supply and demand balance each other, resulting in stable prices.

Market

Any structured exchange where buyers and sellers interact to trade goods, services, or information.

Price

The capital amount projected, necessary, or handed over in trade for something.

Deadweight Loss

The loss in social surplus that occurs when a market is not in efficient equilibrium, often due to externalities, taxes, or subsidies.