A Restaurant Is Being Sued Because a Customer Claims to Have

question 174

Multiple Choice

A restaurant is being 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 accrued as an expense.
• D) An expense must be matched to the period in which the incident occurred.

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Definitions:

Dwarf Varieties

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Second Green Revolution

An ongoing movement to increase agricultural productivity and sustainably feed the global population through advancements in technology and farming practices.

Fast-Growing

Describing organisms, businesses, or phenomena that expand or increase in size, scope, or number quickly over a short period.

Sustainable Agriculture

Farming practices that balance the need for food production with the preservation of environmental quality and the economic viability of farms.