Which One of the Following Items Would Be Most Likely

question 64

Multiple Choice

Which one of the following items would be most likely considered a contingent liability for Cannonbar,a grocery store chain?

• A)A patron slipped on a grape and broke her neck during the period under audit,no claim has been made against Cannonbar.
• B)The IRS has disagreed with deductions claimed on Cannonbar's previous period return.
• C)Management believes that a lawsuit that was filed during the period under audit against Cannonbar will be settled.
• D)Cannonbar has a note payable with a bank that was collateralized by all of the company's receivables in the period under audit.

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Definitions:

Assignment

The transfer of rights or responsibilities from one party to another, typically in a contractual context.

Security Interest

A legal claim or lien on property as collateral for the repayment of a debt, securing an interest in the property for the creditor.

UCC Article 9

A provision of the Uniform Commercial Code dealing with secured transactions, including the assignment of security interests in personal property.

Contract Rights

Legal entitlements derived from agreements between parties, which outline obligations, benefits, and conditions agreed upon.