Which of the Following Is the Proper Treatment for a Liability

question 27

Multiple Choice

Which of the following is the proper treatment for a liability that exists,but the exact amount of which is not known?

• A)The liability should be ignored.
• B)The liability should be treated as a contingent liability.
• C)The amount of the liability should be estimated and recorded.
• D)The liability should be reported in the notes to the financial statements.

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Definitions:

Outcome

The result or final product of an event, process, or action.

An Event

In probability and statistics, an outcome or a set of outcomes from an experiment or situation.

Probabilities

The measure of the likelihood that an event will occur, often expressed as a number between 0 and 1.

Sample Space

All conceivable outcomes or results that can occur in an experiment involving probability.