A Company Has a Contingent Loss That Can Be Estimated

question 72

Multiple Choice

A company has a contingent loss that can be estimated and has a probable chance of occurrence. What reporting does the FASB require regarding this contingency?

• A) It should be accrued and reported on the financial statements and reported in the notes to the financial statements.
• B) It should be reported in the notes to the financial statements.
• C) It should be ignored until the actual loss materializes.
• D) It should be accrued and reported on the financial statements.

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Definitions:

Extensive Delegation

The practice of assigning authority and responsibility widely within an organization to empower employees and improve decision-making processes.

Authority-and-Responsibility

Refers to the right to make decisions and the obligation to ensure tasks are completed as expected, often discussed in managerial and organizational contexts.

Supervisor

An individual in a position of authority who oversees the work of others, often directly managing employees.

Delegated

The act of assigning responsibility or authority to another person to carry out specific tasks.