A Company Has Been Sued for Product Failures Allegedly Resulting

question 202

Multiple Choice

A company has been sued for product failures allegedly resulting in injuries to the individuals bringing the lawsuit.The company's lawyers believe it is more than remote,but less than probable,that the lawsuit will result in an actual liability.Which of the following actions should be taken by the company's management?

• A) The liability should be estimated and recorded as an expense.
• B) The situation should be described in a note to the financial statements.
• C) The possible liability should be ignored.
• D) Management should consider resigning.

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Definitions:

Snakebite

A snakebite is an injury caused by the bite of a snake, often involving injection of venom or introduction of bacteria.

Automated Voice

Refers to synthesized speech generated by computers or other devices, often used in telephone systems, virtual assistants, and accessibility tools.

Emergency Instructions

Guidelines or directives provided to ensure safety and effective response in the event of an emergency situation.

Outgoing Call

A telephone call made from a particular phone or line to an external number.