If a Potential Loss on a Contingent Liability Is Remote

question 88

Multiple Choice

If a potential loss on a contingent liability is remote, the liability usually is

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

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Definitions:

Common Stock

A type of security that represents ownership in a corporation, giving shareholders voting rights and a claim on profits in the form of dividends.

Dividend

A disbursement from a corporation to its stockholders, often derived from earnings.

Preferred Stock

A class of ownership in a corporation that has a higher claim on assets and earnings than common stock, often with dividend priority.

Common Stock

A form of corporate equity ownership, a type of security representing ownership in a corporation.