A Contingency Was Evaluated at Year-End

question 114

True/False

A contingency was evaluated at year-end.Management felt it was probable that this would become an actual liability and the amount could be reasonably estimated.If this is reported on the balance sheet,it could be considered a violation of generally accepted accounting principles.

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Definitions:

Verifiability

The quality of information that different observers could broadly agree the information is a faithful representation, thus helping assure users that information faithfully represents the economic phenomena it purports to represent.

Conclusions

The final part of a document or process in which findings, decisions, or proposals are summarized or resolved.

Conceptual Framework

A set of theoretical principles and concepts that underpin and guide the standards, rules, and procedures of accounting and financial reporting.