Homework Answers
Contingency:
It is a potential - ve event that may or may not occur in future. For example : natural disaster, economic recession, terrorist attack etc. We can get prepared for contingencies by formulating plans and protective measures but however the scope and nature of such - ve events are always unpredictable in advance to some extent.
Contingent liability :
If an obligation arises from a past business event, it is called a liability in financial accounting. Contingent liability is also a liability but obligation may or may not arise which depends on the outcome of an uncertain future event. A contingent liability is accounted for only if the contingency is likely to occur and also reasonably estimation of the liability is possible. On the financial statements, the contingent liability may be disclosed in a footnote unless two of the above said conditions are not met.
(3) A Contingent liability is a potential rather than an actual liability because its depends on...
(3) A Contingent liability is a potential rather than an actual liability because its depends on a future event. Some event must happen( the contingency) for a contingent liability to have to be paid. Contingent liabilities are journalized when the likelihood of an actual loss is probable and the amount of the expense can be reasonably estimated. Rags to Riches, a clothing resale store, employs one salesperson, Dee Hunter. Hunters straight time wage is OMR 10 per hour, with time...
match the following: Deferred revenues Disclosure of a contingent liability Notes payable Recording a contingent liability...
match the following:
Deferred revenues Disclosure of a contingent liability Notes payable Recording a contingent liability Current portion of long-term debt Match each of the options above to the items below. A written promise to repay the amount borrowed plus interest. Loss is probable and amount is reasonably estimable. Debt that will be paid within one year of the balance sheet date. Loss is reasonably possible and amount is reasonably estimable. A liability that requires the sacrifice of something other...
17. If a contingent liability is both and it must be booked as a liability, otherwise...
17. If a contingent liability is both and it must be booked as a liability, otherwise a disclosure in the financial statement notes is sufficient. in a 18. Drawings in a sole proprietorship or partnership are similar to corporation.
Describe the contingency theory of management accounting and discuss the relationship between various contingent factors and...
Describe the contingency theory of management accounting and discuss the relationship between various contingent factors and features of the management accounting system.
Which of the following is a contingent liability? Select one: A. Notes payable X B. Credit...
Which of the following is a contingent liability? Select one: A. Notes payable X B. Credit guarantees C. Income tax payable D. Excise tax payable
A contingent liability is reported on the balance sheet if it is probable and can be...
A contingent liability is reported on the balance sheet if it is probable and can be estimated. True False
a. Recording of a contingent liability 1. An IOU promising to repay the amount borrowed plus...
a. Recording of a contingent liability 1. An IOU promising to repay the amount borrowed plus interest 2 Payment amount is reasonably possible and can be b. Unearned revenues reasonably estimated c. The riskiness of a business's obligations. 3. Mixture of liabilities and equity a business uses d. Disclosure of a contingent liability 4 Payment amount is probable and can be reasonably estimated 5. A liability that requires the sacrifice of something other e. Interest on debt than cash 6...
Exhibit 8: Accounting Treatment of Contingent Liabilities Discuss Exhibit 8, to receive full credit include include...
Exhibit 8: Accounting Treatment of Contingent Liabilities
Discuss Exhibit 8, to receive full credit include include the
definitions of accrual and cash basis accounting systems,
accounting for pensions and contingent liabilities, and GAAP in
your answer.
Likelihood of Occurring Accounting Treatment Measurement Probable Estimable Record and Disclose Liability Not Estimable Disclose Liability Contingency Reasonably Possible Disclose Liability Remote None
A contingent liability that has a remote chance of occurrence should be disclosed in the financial...
A contingent liability that has a remote chance of occurrence should be disclosed in the financial statement footnotes. True False
Which of the following is not an example of a possible contingent liability? O lawsuit for...
Which of the following is not an example of a possible contingent liability? O lawsuit for breach of contract O environmental clean-up O wage increases resulting from union negotiations O land to be expropriated at a gain
match the following:
Deferred revenues Disclosure of a contingent liability Notes payable Recording a contingent liability Current portion of long-term debt Match each of the options above to the items below. A written promise to repay the amount borrowed plus interest. Loss is probable and amount is reasonably estimable. Debt that will be paid within one year of the balance sheet date. Loss is reasonably possible and amount is reasonably estimable. A liability that requires the sacrifice of something other...
17. If a contingent liability is both and it must be booked as a liability, otherwise a disclosure in the financial statement notes is sufficient. in a 18. Drawings in a sole proprietorship or partnership are similar to corporation.
Which of the following is a contingent liability? Select one: A. Notes payable X B. Credit guarantees C. Income tax payable D. Excise tax payable
A contingent liability is reported on the balance sheet if it is probable and can be estimated. True False
a. Recording of a contingent liability 1. An IOU promising to repay the amount borrowed plus interest 2 Payment amount is reasonably possible and can be b. Unearned revenues reasonably estimated c. The riskiness of a business's obligations. 3. Mixture of liabilities and equity a business uses d. Disclosure of a contingent liability 4 Payment amount is probable and can be reasonably estimated 5. A liability that requires the sacrifice of something other e. Interest on debt than cash 6...
Exhibit 8: Accounting Treatment of Contingent Liabilities
Discuss Exhibit 8, to receive full credit include include the
definitions of accrual and cash basis accounting systems,
accounting for pensions and contingent liabilities, and GAAP in
your answer.
Likelihood of Occurring Accounting Treatment Measurement Probable Estimable Record and Disclose Liability Not Estimable Disclose Liability Contingency Reasonably Possible Disclose Liability Remote None
Which of the following is not an example of a possible contingent liability? O lawsuit for breach of contract O environmental clean-up O wage increases resulting from union negotiations O land to be expropriated at a gain
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