A Corporation Has Been Sued for Product Failures Allegedly Resulting

question 94

Multiple Choice

A corporation has been sued for product failures allegedly resulting in injuries to the individuals bringing the lawsuit.The company's lawyers believe it is more than remote,but less than probable,that the lawsuit will result in an actual liability.Which of the following actions should be taken by the company's management?

• A)The liability should be estimated and recorded as an expense.
• B)The situation should be described in a note to the financial statements.
• C)The possible liability should be ignored.
• D)Management should consider resigning.

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Definitions:

Mosses

Mosses are small, non-vascular plants that typically grow in dense green clumps or mats, often in damp or shady locations.

Whisk Ferns

Primitive plants belonging to the genus Psilotum, characterized by simple branching stems and lacking true leaves and roots.

Chromosome Sets

The complete set of chromosomes present in the nucleus of a cell or organism, usually occurring in pairs in diploid organisms.

Gametophyte

The haploid stage in the life cycle of plants and algae that produces gametes (sex cells) through mitosis.