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

question 116

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.

---

Definitions:

Myofibrils

The basic rod-like units of a muscle cell that are essential for muscle contraction and movement.

Strength-Training Tools

Equipment or accessories used to enhance muscle strength and endurance, such as free weights, resistance bands, or weight machines.

Weight Machine

A piece of exercise equipment designed for strength training that uses gravity as the primary source of resistance, and a combination of adjustable weights.

Their Own Body Weight

Refers to an individual's mass or weight without any external additions, often used in the context of exercises that use this weight as resistance.