When a Contingent Liability Exists,the Likelihood for Loss Can Be

question 60

Multiple Choice

When a contingent liability exists,the likelihood for loss can be evaluated as probable,reasonably possible,or remote.A reasonably possible loss is

• A)a loss where the chance of occurrence is slight
• B)a loss that is likely to occur
• C)a loss where the chance of occurrence is moderate
• D)falls between the chance of occurrence is slight and a loss is likely to occur

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Definitions:

Cash Basis

An accounting method whereby revenues and expenses are recorded when cash is received or paid, rather than when they are incurred.

Accounting

The process of recording, classifying, summarizing, and interpreting financial transactions to provide information that is useful in making business decisions.

Financial Statements

Reports summarizing a company's financial performance and position, including income statement, balance sheet, and cash flow statement.

Depreciation

The process of allocating the cost of a tangible asset over its service life, reflecting the decrease in value over time.