Firms Do Not Recognize Certain Obligations That Are Uncertain as to Amount

question 216

Multiple Choice

Firms do not recognize certain obligations that are uncertain as to amount or timing or both as liabilities, unless those items meet a probability threshold and have a reliable measurement attribute.IFRS refers to these as _____, such as the possible obligation under an unsettled lawsuit.

• A)contingent liabilities
• B)unrealized contingencies
• C)realized contingencies
• D)unrecognized contingencies
• E)recognized contingencies

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Definitions:

Standardization

The process of implementing and developing technical standards based on the consensus of different parties including firms, users, interest groups, standards organizations, and governments.

Cost Economies

Refers to the reduction in average cost of production as a firm increases its size or volume of output, typically achieved through operational efficiencies.

Product Variety

The assortment or mix of different products that a company offers to its customers.

Homogeneous Preferences

A situation in market analysis where consumers have similar tastes and preferences for goods or services.