Which of the Following Situations Require Recording a Liability in 2011

question 198

Multiple Choice

Which of the following situations require recording a liability in 2011? (More than one answer may be correct.)

• A) In 2011, a company manufactures and sells stereo equipment which carries a three-year warranty.
• B) In 2011, a theater group receives payments in advance from season ticket holders for productions to be performed in 2012.
• C) A company is a defendant in a legal action. At the end of 2011, the company's attorney feels it is possible the company will lose, and that the amount of the loss might be material.
• D) During 2011, a midwest agricultural co-operative is concerned about the risk of loss if inclement weather destroys the crops.

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Definitions:

Written Contracts

Formal agreements documented in writing that outline the terms, conditions, rights, and obligations of the parties involved.

Planning Process

A systematic series of actions directed towards the achievement of a goal or strategy.

Planned Change Process

A deliberate and structured approach to modify or improve existing conditions within an organization or community.

Formalizing A Contract

The process of establishing a contract in a specified, official format that is legally binding and enforceable.