Liabilities That Might Arise from Which of the Following Probably

question 181

Multiple Choice

Liabilities that might arise from which of the following probably would be disclosed only in the notes to the financial statements?

• A) A lawsuit with a reasonably estimable loss
• B) Two year purchase agreement
• C) Possible bankruptcy of an important customer
• D) Estimated income taxes for the current year

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Definitions:

Cost of Goods Sold

The immediate financial costs tied to the manufacture of goods a company sells, including labor and materials.

Merchandise Inventory

Goods or products that a company holds for the purpose of selling to customers in the ordinary course of business.

Damaged Goods

Items that are physically harmed and are reduced in value, typically making them unsellable at full price.

Consigned Goods

Items given to a third party to sell, but ownership remains with the sender until sold.