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:

Acquisition

The process of acquiring control of another company or business asset through purchase, merger, or another method.

Independent Appraiser

A certified professional who provides an unbiased opinion on the value of an asset, often used in real estate transactions, without any direct connection to the buyer or seller.

Journal Entry

A record in accounting that represents each transaction with debits and credits in financial accounts.

Plant Assets

Long-term tangible assets that are used in the production of goods or services and are not intended for resale, including buildings, machinery, and equipment.