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

question 132

Multiple Choice

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,what effect would it have on the financial reporting of the company?

• A) There would be no effect.
• B) The liabilities on the balance sheet would be understated.
• C) The information about the transaction would be inadequately disclosed in the notes.
• D) The net income of the company would be understated.

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Definitions:

Differences

The qualities or characteristics that make one thing distinct from another or the state of being unlike or dissimilar.

Public Influence

The impact or effect the general populace has on public policy, political decisions, or the direction of society through various means.

Interest Groups

Organizations formed by individuals sharing common objectives or interests that seek to influence public policy and government actions.

Policy Legislation

Laws created to direct specific actions or procedures aimed at solving public issues or problems.