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:

Diffusion Of Responsibility

A psychological phenomenon where individuals in a group are less likely to take action or feel less responsible because the responsibility is shared among all members of the group.

First Aid

The immediate assistance given to a person suffering from minor or serious illness or injury, to preserve life, prevent the condition from worsening, or promote recovery.

Pro-Social Behaviour

Actions intended to benefit others or society as a whole.

Halo Effect

A cognitive bias where the perception of one positive quality in a person or thing influences the perception of other, unrelated qualities.