A Certain Contingent Liability Was Evaluated at Year- End, and Considered

question 24

Multiple Choice

A certain contingent liability was evaluated at year- end, and considered to have a remote possibility of becoming an actual liability. If the accountant decided NOT to report it on the balance sheet or in the notes to the financial statement, what effect would this have on the financial reporting of the company?

• A)There would be no effect.
• B)The net profit of the company would be understated.
• C)The liabilities on the balance sheet would be understated.
• D)The information about the transaction would be inadequately disclosed in the notes.

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Definitions:

Values-Based Leadership

Involves leading others in a manner that adheres to and promotes a set of core values, influencing organizational culture and decisions.

Personal Values

These refer to the individual's beliefs and principles that guide their behavior and decision-making.

Beliefs

Convictions or acceptances that something exists or is true, especially without proof.

Servant Leadership

A pattern of leadership that places an emphasis on employees and the community rather than on the leader.