A Restaurant Has Been Sued Because a Customer Claims to Have

question 97

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 not be shown in the financial statements.
• C)The liability should be estimated and recorded as an expense.
• D)Management should consider resigning.

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Definitions:

Anesthesiology Report

A document detailing the anesthesia administered during a surgical procedure, including drugs, doses, and patient response.

Pathology Report

A document produced by a pathologist detailing the diagnosis determined from the examination of cells and tissues.

Physical Therapy Report

A document summarizing the assessment, treatment plan, and progress of a patient undergoing physical therapy.

Objective Information

Information that is fact-based, measurable, and observable, unaffected by personal feelings or opinions.