Uncertainties Such as Natural Disasters

question 118

Multiple Choice

Uncertainties such as natural disasters:

• A) Are not contingent liabilities because they are future events not arising from past transactions or events.
• B) Are contingent liabilities because they are future events arising from past transactions or events.
• C) Should be disclosed because of their usefulness to financial statements.
• D) Are estimated liabilities because the amounts are uncertain.
• E) Arise out of transactions such as debt guarantees.

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Definitions:

Sales Force

The Sales Force consists of a group of employees focused on sales operations, whose primary responsibilities include promoting, selling, and securing orders from existing and prospective customers.

Distributors

Companies or agents responsible for delivering products from manufacturers to market, forming a vital part of the distribution channel.

Make-or-Buy Decision

A choice made by a company between manufacturing a product in-house or purchasing it from an external supplier.

Manufacturing Business

A company engaged in the industrial production of goods from raw materials using various processes, machinery, and operations.