Which of the Following Is Most Likely to Require Only

question 19

Multiple Choice

Which of the following is most likely to require only a note disclosure as a contingency?

• A) Cash discounts given for early payment by customers (which are almost always taken)
• B) Remote chance of loss from a lawsuit in process
• C) Probable claim for an income tax refund
• D) Loss from an investment in equity securities that is certain

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Definitions:

Implied Warranties

Legal guarantees assumed in a transaction that the product will meet a minimum level of quality and functionality.

Fitness for a Particular Purpose

A warranty in commercial transactions that a product will meet the specific requirements of the buyer, as known by the seller at the time of sale.

Merchantability

A guarantee that a product will meet reasonable quality and performance expectations as implied in a sales contract.

Statute of Limitations

A law that sets the maximum time after an event within which legal proceedings may be initiated.