A Basic Difference Between Loss Contingencies and "Real" Liabilities Is

question 72

Multiple Choice

A basic difference between loss contingencies and "real" liabilities is:

• A) Liabilities stem from past transactions; loss contingencies stem from future events.
• B) Liabilities always are recorded in the accounting records, whereas loss contingencies never are.
• C) The extent of uncertainty involved.
• D) Liabilities can be large in amount, whereas loss contingencies are immaterial.

Analyze the effects of currency appreciation and depreciation on international trade and economic conditions.

Evaluate the pros and cons of the managed float system of exchange rates.

Recognize the role of opportunity costs in determining specialization and trade patterns.

Identify the conditions under which nations gain from trade and how terms of trade affect these gains.

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Definitions:

CICA Handbook

The Canadian Institute of Chartered Accountants Handbook, containing the generally accepted accounting principles (GAAP) in Canada.

Expenditure Basis

An accounting method that recognizes expenses when they are paid rather than when they are incurred.

Expense Basis

An accounting method where expenses are recognized and recorded when they are incurred, regardless of when the cash payment is made.

Encumbrance Accounting

An accounting method used mainly by governments that tracks commitments in their budgets, earmarking funds for specific future expenditures.