If Management Can Estimate the Amount of Loss That Will

question 16

Multiple Choice

If management can estimate the amount of loss that will occur due to litigation against the company,and the likelihood of the loss is probable,a contingent liability should be

• A)Disclosed,but not reported as a liability.
• B)Disclosed and reported as a liability.
• C)Neither disclosed nor reported as a liability.
• D)Reported as a liability,but not disclosed.

---

Definitions:

Administrative Expense

Overhead or general expenses related to the administration of a business, not directly tied to any specific department or product.

Expected Net Income

The projected profit of a business after all expenses and taxes have been deducted from total revenue.

Sales Commission

A fee paid to sales personnel, often calculated as a percentage of the sales they generate.

Machine-Hours

A unit of measure for the amount of work or operation time a machine has completed or is expected to complete.