Information Obtained Prior to the Issuance of the Current Period's

question 62

Multiple Choice

Information obtained prior to the issuance of the current period's financial statements of KG Company indicates that it is probable that,at the date of the financial statements,a liability will be incurred for obligations related to product warranties on products sold during the current period.During the past three years,product warranty costs have been approximately 1 1/2 percent of annual sales revenue.An estimated loss contingency should be:

• A) Neither accrued nor disclosed in the financial statements.
• B) Recognized as an appropriation of retained earnings.
• C) Accrued in the accounts and reported in the financial statements.
• D) Disclosed in the financial statements but not accrued.

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Definitions:

Immune Cells

Cells of the immune system that protect the body against infectious disease and foreign invaders such as bacteria and viruses.

Aromatherapy

The use of essential oils extracted from plants for therapeutic purposes, aimed at improving physical, emotional, and mental well-being.

Specific Conditions

Distinct or particular diseases, disorders, or situations affecting an individual’s health.