For the following questions, circle the best response.
Contingencies and commitments are disclosed as footnotes in the “financial review” section of the annual report rather than being directly included in the financial statements because
a. the obligation to make payments has not yet materialized.
b. litigation losses and purchase commitments do not have to be paid within a year.
c. reporting additional expenses and liabilities would have a negative effect on the income statement and balance sheet.
d. investors prefer to see the details in the financial review rather than in the financial statements.
e. these items relate only to specific segments of the firm’s operations.
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