Under ASPE, a Contingency That Is Not Likely to Occur

question 109

Multiple Choice

Under ASPE, a contingency that is not likely to occur

• A) should be disclosed in the financial statements.
• B) must be accrued as a loss.
• C) does not need to be disclosed unless the loss would result in a substantial negative effect on the company's financial position.
• D) is recorded as a contingent loss.

Understand the commonality and significance of home-based financial and service-related businesses.

Identify sources of ideas for new businesses.

Differentiate between an idea and an opportunity in the business context.

Understand the initial tax obligations for new businesses, including the requirement for advance payments of estimated income taxes.

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Definitions:

Credit Entry

An accounting entry that increases a credit account or decreases a debit account, representing the source of funds or value entry in a financial transaction.

Direct Material Price

The cost of raw materials that are directly used in the manufacturing of a product.

Actual Production

The real, quantifiable output of goods or services produced by a company during a specific period, as opposed to theoretical or planned production levels.

Normal Production

The standard or average level of production volume that a company expects to achieve under normal operating conditions.