Problem

Contingencies and commitments are disclosed as notes to the financial statements rather...

Contingencies and commitments are disclosed as notes to the financial statements 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 notes rather than in the financial statements.

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Solutions For Problems in Chapter 10