Uncertainties Such as Natural Disasters

question 118

Multiple Choice

Uncertainties such as natural disasters:

• A) Are not contingent liabilities because they are future events not arising from past transactions or events.
• B) Are contingent liabilities because they are future events arising from past transactions or events.
• C) Should be disclosed because of their usefulness to financial statements.
• D) Are estimated liabilities because the amounts are uncertain.
• E) Arise out of transactions such as debt guarantees.

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Definitions:

Experimentation

The process of trying out new ideas, concepts, or strategies to test hypotheses and gain insights that can lead to innovation or improvement.

Careful

Paying close attention to detail and being cautious to avoid mistakes or accidents.

Experience

The knowledge or skill acquired by a period of practical involvement in or exposure to events.

Decision Making

The cognitive process of selecting a course of action among several alternatives to achieve a desired objective.