Under ASPE, a Contingent Liability Must Be Accrued in the Financial

question 81

Multiple Choice

Under ASPE, a contingent liability must be accrued in the financial statements if

• A) it can be reasonably estimated and is unlikely to occur.
• B) it can be reasonably estimated and is likely to occur.
• C) it is likely to occur but cannot be reasonably estimated.
• D) the amount of the potential loss is greater than the balance in the cash account.

---

Definitions:

Substitution Effect

The change in the consumption of goods in response to a change in their relative prices, holding the consumer's level of utility constant.

Labor Supply Curve

The graphical representation showing the relationship between the different wage rates and the quantity of labor that workers are willing to supply.

Wage Rate

The amount of compensation a worker receives per unit of time, such as an hour or a week, for their labor.

Backward Bending

A curve, often related to the labor supply, indicating that beyond a certain wage level, as wages increase, individuals may choose to work fewer hours, prioritizing leisure over additional income.