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

question 116

Multiple Choice

A contingency was evaluated at year-end and considered to have a reasonable possibility of becoming an actual liability.If this was not reported in the notes to the financial statements,what is the effect 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.

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Definitions:

Persistent Depressive Disorder

A long-term form of depression where a person experiences a depressed mood more days than not, for at least two years.

Cyclothymia

A mood disorder characterized by periods of mild depression and hypomania, less severe than bipolar disorder.

Cognitive-Behavioural Therapy

A psychotherapeutic treatment that helps patients understand the thoughts and feelings that influence behaviors, aiming to change negative thought patterns and behaviors.

Behavioural Activation

A therapy approach that focuses on engaging patients in activities that are aligned with their values and interests to combat depression and other mental illnesses.