Which of the Following Scenarios Regarding a Lawsuit Filed Against

question 24

Multiple Choice

Which of the following scenarios regarding a lawsuit filed against a client by a third party would qualify as a "contingent liability"?

• A)A lawsuit has been filed but not yet resolved.
• B)A lawsuit was filed and concluded with the client winning.
• C)A lawsuit was filed and concluded with a third party winning an award of $100 000,but the client hasn't paid yet.
• D)A lawsuit was filed and concluded with a third party winning an award of $100 000,which the client paid after the balance sheet date but before the statements were issued.

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Definitions:

FOB Shipping Point

A shipping term indicating that the buyer assumes transportation costs and risk of loss once the goods leave the seller's premises.

Consignee

The individual or entity designated to receive goods being shipped or transported, who may not be the actual owner of the goods until certain conditions are met.

Consignment

A business arrangement in which goods are left in the possession of another party to sell, but ownership remains with the supplier until the goods are sold.

Inventory Items

Goods and materials that a business holds for the ultimate goal of resale or production in the course of operations.