Indicate Whether Each of the Following Statements About Contingent Liabilities

question 21

Short Answer

Indicate whether each of the following statements about contingent liabilities is true or false.
1. If the likelihood of a future obligation from a contingent liability is remote, a company does not report it on the financial statements or disclose it in the notes to the financial statements
2. If a company has a contingent liability where the future obligation is deemed probable but the amount cannot be estimated, the liability should be disclosed in the footnotes to the financial statements
3. Employees' vacation pay is a contingent liability that usually should be recognized on the financial statements
4. If a customer was injured while using a company's product, the company might need to disclose a contingent liability
5. If a company has a contingent liability where the future obligation is deemed possible, the liability should be reported on the balance sheet

---

Definitions:

Application

A software program designed to perform a specific function directly for the user or, in some cases, for another application program.

Gratitude

A feeling of thankfulness and appreciation.

Report-for-work Date

The specified day an employee is expected to start their job or return to their workplace following an absence.

Job-acceptance Message

A written or verbal response in which an individual accepts a job offer, often detailing the terms of employment.