A Certain Contingent Liability Was Evaluated at Year-End; the Company

question 51

True/False

A certain contingent liability was evaluated at year-end; the company felt it was probable that it would become an actual liability,and the amount could be reasonably estimated.If the accountant decided NOT to report it on the balance sheet or in the notes to the financial statement,this could be considered unethical behavior.

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Definitions:

Inventory

Consists of the goods and materials a business holds for the purpose of resale or production.

Cash Collection

The process of receiving and processing payments from customers, typically impacting the business’s liquidity.

Unearned Revenues

Income received by an individual or company for a service or product that has yet to be provided or delivered.

Liabilities

Financial obligations or debts that a company owes to others, which must be settled over time through the transfer of assets, provision of services, or other means.