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

question 51

Multiple Choice

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

• A) it can be reasonably estimated and unlikely to occur.
• B) it can be reasonably estimated and 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.

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Definitions:

Truth

The quality or state of being in accordance with fact or reality.

Privilege

A special right, advantage, or immunity granted to a particular person or group of people.

Defamation

The act of communicating false statements about a person that injure their reputation.

Actual Malice

A legal standard in defamation law requiring the plaintiff to prove that the defendant made a false statement with knowledge of its falsity or with reckless disregard for the truth.