Homer Security Systems Experienced an Event That Had the Following

question 138

Multiple Choice

Homer Security Systems experienced an event that had the following effects on its financial statements. Which of the following events would have caused these effects?

• A)Recognizing a contingent liability that has a remote chance of occurring
• B)Recognizing a contingent liability that has a reasonably possible chance of occurring but is not estimable
• C)Recognizing a contingent liability that has a probable chance of occurring and is estimable
• D)All of the answers describe events that could have caused the effects shown in the financial statements model.

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Definitions:

Raw Materials

Basic materials used in the manufacturing process to produce finished goods, not yet processed or used in production.

Selling And Administrative Costs

Expenses related to the selling of products and the administrative aspects of a business, excluding production costs.

Direct Labor Costs

The expenses that a company incurs through the wages paid to workers directly involved in manufacturing goods or providing services.

Manufacturing Overhead

Indirect factory-related costs that are incurred when a product is manufactured, including costs such as depreciation, utilities, and salaries for supervisors.