Conboy Corporation Disclosed in the Notes to Its Financial Statements

question 16

Multiple Choice

Conboy Corporation disclosed in the notes to its financial statements that a significant number of its unsecured trade account receivables are with companies that operate in the same industry. This disclosure is required to inform financial statement users of the existence of

• A) Concentration of market risk.
• B) Risk of measurement uncertainty.
• C) Off-balance sheet risk of accounting loss.
• D) Concentration of credit risk.

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Definitions:

Apartment Building

A residential building containing multiple apartments or units meant for separate tenants.

Warranty

A promise, statement, or other representation that an item has certain qualities; also, an insured’s promise to abide by restrictions, especially those written into an insurance policy. Also, an obligation imposed by law that an item will have certain qualities. Warranties made by means of a statement or other affirmation of fact are called express warranties; those imposed by law are implied warranties.

Insured

A party that is protected by an insurer against losses caused by the risks specified in an insurance policy.

Insurance Company

A financial institution that provides a range of insurance policies to protect individuals and businesses against the risk of financial losses in return for premium payments.