Which Statement Reflects a Recognition of Contingencies

question 54

Multiple Choice

Which statement reflects a recognition of contingencies?

• A)"We pay labourers by the hour and machinists with a piece rate system."
• B)"Our aim is to have the best benefits package in the nation."
• C)"Customer Service is Job 1."
• D)"After months of study we finally decided to go with a state-of-the-art management information system."
• E)"Our company policies ensure that every employee is treated equitably."

---

Definitions:

Cash Receipt

The collection of money (currency, checks, electronic transfers) by a business or individual, typically documented for accounting purposes.

Compensating Balance

A minimum account balance that a borrower agrees to maintain in a bank account as a condition for receiving a loan, often to compensate the bank for the loan or to secure better loan terms.

Footnotes

Additional information provided at the end of financial statements to give more detail or provide explanations about items in the financial statements.

Credit Sale

A type of transaction in which goods or services are provided to a customer with the understanding that payment will be made at a later date.