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

question 3

Multiple Choice

In accounting for a contingent liability, if the likelihood of the obligation is probable but the amount cannot be estimated, a company must

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

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Definitions:

Molecular Variation

Differences at the molecular level among individuals, which can include variations in DNA sequences, genes, and proteins.

Genetic Bottleneck

A significant reduction in the genetic diversity of a population due to a large decrease in its size, potentially affecting its survival and evolution.

Mitochondrial DNA

The DNA located in mitochondria, the energy-producing structures within cells, inherited only from the mother and used to trace maternal lineage.

Mutation Rate

The frequency at which new mutations occur in a genome over a particular period of time, influencing genetic variation within populations.