The Financial Accounting Standards Board (FASB) defines a loss contingency as _______.
A)an existing condition or situation involving uncertainty as to possible loss that will ultimately be resolved when one or more future events occur or fail to occur
B)an existing condition or situation involving certainty as to possible loss that will ultimately be resolved when one or more future events occur or fail to occur
C)an existing condition or situation involving uncertainty as to possible loss that will ultimately be resolved when one or more future events fail to occur
D)an existing condition or situation involving uncertainty as to possible gain that will ultimately be resolved when one or more future events occur or fail to occur

Question

Quizplus · Accepted Answer

A loss contingency is defined as an existing condition or situation involving uncertainty as to possible loss that will ultimately be resolved when one or more future events occur or fail to occur. It is not a certainty of possible loss (option B) nor does it involve uncertainty as to possible gain (option D). Option C is partially correct but incomplete as it only considers the possibility of future events failing to occur.

The Financial Accounting Standards Board (FASB) Defines a Loss Contingency