A restaurant is being sued because a customer claims to have found a bug in her chili. The company's lawyers believe there is only a remote possibility that the lawsuit will result in an actual liability. Which of the following actions should be taken by the company's management?
A) The situation should be described in a note to the financial statements.
B) The possible liability should not be shown in the financial statements.
C) The liability should be estimated and accrued as an expense.
D) An expense must be matched to the period in which the incident occurred.
B) The possible liability should not be shown in the financial statements.
You might also like to view...
A(n) ________ is defined as a good, service, idea, or some combination of these that satisfies consumer or business customer needs through the exchange process
A) private brand B) service variability C) core product D) product E) innovation
What type of report covers speci?cations, costs, potential problems, etc.?
A) Progress. B) Feasibility. C) Investigative. D) Incident. E) Trip.
The board of directors cannot declare dividends when the corporation:
a. is insolvent. b. is merging with another corporation. c. is the subject of a takeover bid. d. issues new stock.
Book value per share is the ratio of ________
A) common stock equity to number of outstanding common shares B) retained earnings to number of outstanding common shares C) fixed assets to number of outstanding common shares D) total liabilities to number of outstanding common shares