The Disclosure of a Contingent Liability Only in the Footnotes

question 120

Multiple Choice

The disclosure of a contingent liability only in the footnotes designates that the possibility of an actual obligation occurring is:

• A)remote.
• B)possible.
• C)probable.
• D)certain.

Calculate gross profit for a company.

Acknowledge the importance of tracking inventory activities in merchandising companies.

Recognize the period-end adjusting entries required under new revenue recognition standards.

Differentiate between periodic and perpetual inventory accounting systems.

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Definitions:

Indeterminate

A situation or outcome that cannot be predicted, decided, or clearly defined.

Total Utility

The complete fulfillment derived from the consumption of a specific amount of products or services.

Marginal Utility

The extra pleasure or advantage obtained from the consumption of an additional unit of a product or service.

Beers

Alcoholic beverages made from fermented grains like barley, often flavored with hops and served as a popular social drink.