A Restaurant Has Been Sued Because a Customer Claims to Have

question 64

Multiple Choice

A restaurant has been sued because a customer claims to have found a bug in her chili.The company's lawyers believe there is only a remote possibility that the lawsuit will result in an actual liability.Which of the following actions should be taken by the company's management?

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

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Definitions:

P-Value

A statistical measure that helps scientists determine the significance of their research results.

Test Statistic

A value calculated from sample data used to determine whether to reject the null hypothesis in a statistical hypothesis test.

P-Value

The potential of observing test results that are at least as extreme as the actual ones, under the belief that the null hypothesis is accurate.

Test Statistic

A calculated value used in statistical hypothesis testing that helps decide whether to reject the null hypothesis.