If a Potential Loss on a Contingent Liability Is Unlikely

question 29

Multiple Choice

If a potential loss on a contingent liability is unlikely and the event will not likely have a significant adverse financial effect,the liability should be

• A)accrued and indicated in the body of the financial statements.
• B)disclosed in footnotes but not accrued.
• C)neither accrued nor disclosed in footnotes.
• D)disclosed in the auditor's report but not disclosed on the financial statements.

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Definitions:

Competitive Market

A market structure characterized by a large number of buyers and sellers, where no single entity has a significant influence on the market price.

Long-Run Equilibria

A state in economics where all factors of production and costs are variable, and firms make decisions to maximize profits without any fixed inputs.

Demand Increases

A situation in which the desire and ability of consumers to purchase a good or service grow, typically leading to higher prices and potentially greater supply.

Market Supply

The total amount of a specific good or service that is available to consumers at current prices in a given market.