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:

Securities And Exchange Commission

A U.S. federal agency responsible for regulating the securities industry and enforcing federal securities laws.

Federal Securities Laws

Regulations established to govern the sale and distribution of securities, aimed at protecting investors from fraud.

Small-Business Issues

Challenges and problems commonly faced by small enterprises, including financial management, marketing, and operations.

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