If Management Can Estimate the Amount of Loss That Will

question 90

Multiple Choice

If management can estimate the amount of loss that will occur due to litigation against the company,and the likelihood of the loss is reasonably possible,a contingent liability should be

• A)Disclosed,but not reported as a liability.
• B)Disclosed and reported as a liability.
• C)Neither disclosed nor reported as a liability.

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Definitions:

Book Value

The net value of a company's assets minus its liabilities, essentially what shareholders would theoretically receive if a company was liquidated.

Component Costs

The costs associated with each element or part of a product, project, or service, crucial for calculating the total cost or setting a price.

Investor Returns

The gain or loss on an investment over a specified period, usually expressed as a percentage of the investment's initial cost.

Capital Components

The various sources of funding a company uses to finance its operations, including debt, equity, and any hybrid instruments.