Which of the Following Statements Regarding Contingencies Is True

question 72

Multiple Choice

Which of the following statements regarding contingencies is true?

• A)Contingencies that are probable and not estimable appear on the balance sheet.
• B)Contingencies that are probable and not estimable are disclosed in the notes to the financial statements.
• C)Contingencies that are remote but estimable are disclosed in the notes to the financial statements.
• D)Contingent assets are recorded on the balance sheet,but not in the notes to the financial statements.

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Definitions:

Inflows

Funds coming into a business from operations, investments, or financing activities.

Borrower in Default

A situation where a borrower fails to meet the legal obligations of a loan, such as not making scheduled payments.

Courses of Action

Different strategies or plans that an entity can choose to undertake in response to various scenarios or problems.

Quick Ratio

The quick ratio, or acid-test ratio, measures a company's ability to pay its short-term liabilities with its most liquid assets.