A Contingent Liability Should Be Disclosed in a Note to the Financial

question 68

Multiple Choice

A contingent liability should be disclosed in a note to the financial statements rather than being recorded if:

• A)The likelihood of a loss is remote.
• B)The incurrence of a loss is reasonably possible.
• C)The incurrence of a loss is probable.
• D)The likelihood of a loss is eighty percent.

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Definitions:

Executive Orders

Directives issued by the president of the United States or state governors that have the force of law, often used to manage operations of the federal or state government.

Preponderance of the Evidence

The standard of proof in civil cases, where the burden of proof is met if the proposition is more likely to be true than not true.

Trespass

Unauthorized entry onto someone else's property without permission.

Justice

The principle of fairness and moral righteousness that guides the administration of law and ensures that individuals receive what they are due.