A Certain Contingent Liability Was Evaluated at Year- End; the Company

question 66

True/False

A certain contingent liability was evaluated at year- end; the company felt it was probable that it would become an actual liability, and the amount could be reasonably estimated. If the accountant decided NOT to report it on the balance sheet or in the notes to the financial statement, this could be considered unethical behaviour.

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Definitions:

Operating Lease

A lease agreement for short-term leasing of assets without transferring ownership rights.

Balance Sheet

A financial statement that summarizes a company's assets, liabilities, and shareholders' equity at a specific point in time, providing a basis for computing rates of return and evaluating its capital structure.

Financial Lease

A type of lease wherein the lessee has possession and control of an asset during its significant life but does not own the asset, effectively treating it as a loan with asset as collateral.

CRA

In the context of Canadian taxation, CRA stands for Canada Revenue Agency, the federal agency responsible for tax collection and enforcement.