true or false....A certain contingent liability was evaluated at year end; and considered to have a reasonable possibility of becoming an actual liability. if the accountant decided not to report it on the balance sheet or in the notes to the financial statements, this could be considered a violation of generally accepted accounting principles.
Solution
TRUE.
According to GAAP, at the year-end or at the end of the accounting period if a contingent liability is ascertained to be a possible actual liability but its value cannot be estimated then it must be reported in the notes to the financial statements.
As the accountant decided not to report it in the notes to the financial statements then it is a violation of GAAP.
I hope my solution solves your query.
Regards.
.
true or false----A certain contingent liability was evaluated at year.docx
1. true or false....A certain contingent liability was evaluated at year end; and considered to have a
reasonable possibility of becoming an actual liability. if the accountant decided not to report it on
the balance sheet or in the notes to the financial statements, this could be considered a violation
of generally accepted accounting principles.
Solution
TRUE.
According to GAAP, at the year-end or at the end of the accounting period if a contingent
liability is ascertained to be a possible actual liability but its value cannot be estimated then it
must be reported in the notes to the financial statements.
As the accountant decided not to report it in the notes to the financial statements then it is a
violation of GAAP.
I hope my solution solves your query.
Regards.
