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

question 130

Multiple Choice

In accounting for a contingent liability, if the likelihood of the obligation is remote, a company should

• A) recognize the liability and report it on the balance sheet.
• B) provide disclosure in the footnotes to the financial statements.
• C) report an allowance account on the balance sheet.
• D) do nothing.

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Definitions:

Maslow's Hierarchy

A theory in psychology proposed by Abraham Maslow that categorizes human needs into a five-level pyramid, with basic needs at the bottom and self-actualization at the top.

Physiological

Pertaining to the functions and activities of living organisms and their parts, including all physical and chemical processes.

Safety and Security

The state of being free from danger or threat and having measures in place to protect against harm.

Maslow's Hierarchy

A theory in psychology proposed by Abraham Maslow, suggesting that people are motivated to achieve certain needs and that some needs take precedence over others, structured in a hierarchy from physiological needs to self-actualization.