Which of the Following Events Would Be Considered an Extraordinary

question 46

Multiple Choice

Which of the following events would be considered an extraordinary item?

• A) An airline experienced a significant loss due to a strike by employees of the company who provide its aircraft maintenance.
• B) A food cannery was faced with a large loss of inventory of canned soups due to government condemnation because of possible botulism contamination; the company had never experienced a similar situation in its history.
• C) A company, located on an island which has experienced severe flooding three times in the past 25 years, was subjected to a heavy loss of physical plant due to flooding.
• D) A medical corporation was required to pay a patient damages equal to three times its average net income. The corporation had experienced suits of this nature in the past, but the amount of the losses had never exceeded 5 percent of the corporation's average net income.

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Definitions:

Prepared

The state of having something ready for use or consideration, often used in the context of financial documents or plans.

Adjusted Trial Balance

A list of all accounts and their balances after adjusting entries are made, used to prepare financial statements.

Liabilities

The rights of creditors that represent debts of the business.

Period

Period refers to a length or portion of time, often defined in the context of financial reporting or cycles.