When a Gain Contingency Is Probable and the Amount of Gain

question 1

Multiple Choice

When a gain contingency is probable and the amount of gain can be reasonably estimated,the gain should be:

• A)Reported in the income statement and disclosed.
• B)Offset against stockholders' equity.
• C)Disclosed,but not recognized in the income statement.
• D)Reported in the income statement,but not disclosed.

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Definitions:

Disposable Income

Disposable income is the amount of money that households or individuals have available for spending and saving after income taxes are accounted for.

Consumption

The use of goods and services by households or individuals, forming part of the aggregate demand in an economy.

Induced Consumption

The portion of consumer spending that varies with income. As income increases, consumers will spend more, and as income decreases, consumers will spend less.

Disposable Income

The financial capabilities households have for saving and spending endeavors post income tax deductions.