Gain Contingencies That Are Remote and Can Be Reasonably Estimated

question 21

Multiple Choice

Gain contingencies that are remote and can be reasonably estimated

• A) must be disclosed in a note to the financial statements.
• B) may be disclosed in a note to the financial statements.
• C) must be reported in the body of the financial statements.
• D) should not be reported or disclosed.

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Definitions:

Total Asset Turnover

A financial ratio that measures a company's efficiency in using its assets to generate sales revenue.

Net Working Capital

The difference between a company's current assets and current liabilities, indicating the short-term financial health of a company.

Current Ratio

A liquidity ratio that measures a company's ability to cover its short-term obligations with its current assets.

Du Pont Equation

A formula that breaks down the Return on Equity (ROE) into three key components: profit margin, asset turnover, and financial leverage, allowing for a deeper analysis of what drives a company's ROE.