Which of the following conditions is (are)appropriate for using retention?
I.Losses are difficult to predict.
II.The worst possible loss is not serious.
A)I only
B)II only
C)both I and II
D)neither I nor II

Question

Quizplus · Accepted Answer

Retention is appropriate when the worst possible loss is not serious, meaning the entity can absorb the loss without significant financial strain. When losses are difficult to predict, relying on retention could be risky, as unpredictable and potentially large losses could financially harm the entity.

Which of the Following Conditions Is (Are)appropriate for Using Retention