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:

Good Faith

Acting with honest intention or belief without intending to deceive.

Credit

Refers to the provision of resources (such as money) by one party to another party with the understanding that the resources will be repaid, often with interest, at a future date.

Issuance Price

The price at which a company's securities are offered to the public for sale for the first time.

Market Rate

The prevailing price or interest rate at which goods, services, or securities are bought and sold in a competitive marketplace.