A contingency must be accrued in the accounts and reported in the financial statements when

Question

Quizplus · Accepted Answer

Contingencies should be recognized as a liability and accrued when the amount of the loss can be reliably estimated and it is probable that an asset is impaired or a liability incurred. If the loss amount cannot be reliably estimated, then disclosure should be made in the financial statements. If it is not probable that a liability has been incurred, no accrual is necessary.

A Contingency Must Be Accrued in the Accounts and Reported