In Accounting for a Contingent Liability, If the Likelihood of the Obligation

question 101

Multiple Choice

In accounting for a contingent liability, if the likelihood of the obligation is probable and the amount can be estimated, a company must

• A) report the liability on the balance sheet.
• B) provide disclosure in the footnotes to the financial statements.
• C) not recognize the liability until it is certain and the exact amount is known.
• D) do nothing.

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