If Management Can Estimate the Amount of Loss That Will

question 65

Multiple Choice

If management can estimate the amount of loss that will occur due to litigation against the company,and the likelihood of the loss is reasonably possible,a contingent liability should be

• A)Disclosed,but not reported as a liability.
• B)Disclosed and reported as a liability.
• C)Neither disclosed nor reported as a liability.
• D)Reported as a liability,but not disclosed.

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Definitions:

Wages Expense

The total cost incurred by a business for the payment of wages to employees for a specific period.

Proprietorship

A proprietorship, also known as a sole proprietorship, is a type of business that is owned and run by one individual and where there is no legal distinction between the owner and the business entity.

Liabilities

Liabilities are financial obligations or debts that a company owes to others, to be settled over time through the transfer of economic benefits including money, goods, or services.

Owner's Equity

The total value that the owners or shareholders have invested in a company minus any liabilities.