Loss Contingencies Ocean to Coast Airlines Could,at Any Time,incur a Large Loss

question 82

Essay

Loss contingencies
Ocean to Coast Airlines could,at any time,incur a large loss if one of its airplanes were to crash.Is this an example of a loss contingency which should be disclosed in the company's financial statements? Explain.

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Definitions:

Implicit Costs

Non-monetary opportunity costs, such as time or foregone alternatives, not directly accounted for in financial transactions.

Explicit Costs

Direct, out-of-pocket payments for expenses such as wages, rent, and materials, which are easily quantifiable.

Accountants

Professionals who manage financial records, conduct audits, and ensure tax compliance, playing a pivotal role in financial planning and analysis.

Accounting Profit

The difference between total monetary revenue and total monetary costs, and is calculated by subtracting explicit costs from total revenue.