A Disclosure of a Contingent Liability in the Footnotes Is

question 69

Multiple Choice

A disclosure of a contingent liability in the footnotes is made rather than adjusting the financial statement accounts when

• A) The outcome of the event is judged to be reasonably possible and the loss can be reasonably estimated.
• B) The loss can be reasonably estimated, but the outcome is unknown.
• C) The outcome of the event is judged to be reasonably possible but the loss cannot be reasonably estimated.
• D) The outcome is unknown and the loss is reasonably estimable but the entity does not want to book the loss.

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Definitions:

Indirect Order

A communication approach where the main point or conclusion is presented after the background and supporting information.

Short Reports

Concise written documents that provide essential information on a specific topic, often used in business and academic contexts.

Formality Stairway

A theoretical framework that categorizes communication styles according to their level of formality, from casual to highly formal.

Transmittal Message

A brief formal message that accompanies a document or package, detailing the contents and purpose of the enclosed materials to the recipient.