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

question 13

True/False

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 to report it on the balance sheet, this could be considered a violation of generally accepted accounting principles.

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Definitions:

Tempered Steel Alloy

steel that has been heat-treated to increase its strength and toughness, often used in applications requiring durability and resistance to wear.

Class 8 Truck

A classification for heavy trucks with a Gross Vehicle Weight Rating (GVWR) exceeding 33,000 pounds.

Frame Rails

The long, structural members of a vehicle frame that provide support and shape to the vehicle's body and chassis.

Suspension Weight

The portion of a vehicle's total weight that is supported by its suspension system.