A Contingency Was Evaluated at Year-End and Considered to Have

question 177

Multiple Choice

A contingency was evaluated at year-end and considered to have a remote possibility of becoming an actual liability.If this was not reported on the balance sheet or in the notes to the financial statements,what effect would this 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:

Warm Supportive Friends

Friends who provide encouragement, understanding, and care in a consistent and unconditional manner, contributing positively to one's emotional well-being.

Outcomes

The results or effects of an action, situation, or event; the endpoint of a process or activity.

Hallucinations

Sensory experiences that appear real but are created by the mind, without any external stimulus.

Voices Inside

Refers to the experience of hearing internal voices or thoughts, which can be a normal aspect of introspection or a symptom of certain psychological conditions.