Footnote Disclosure in the Financial Statement Is Necessary If the Contingent

question 2

Multiple Choice

Footnote disclosure in the financial statement is necessary if the contingent liability:

• A) is remote.
• B) is probable.
• C) is reasonably possible.
• D) has occurred.

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Definitions:

Par of Common Stock

The stated face value of a common stock as specified in the corporate charter, which has little relation to the stock’s market value.

Par Value

Par value is the nominal or face value of a stock or bond as stated by the issuing company, which might not reflect its market value.

Financial Condition

Refers to the current state of a company's financial health and stability, often assessed through its assets, liabilities, revenue, and expenses.

Corporate Charter

A legal document that establishes a corporation's existence and outlines its rights, privileges, and limitations as granted by the state of incorporation.