According to the Statement of Financial Accounting Standards No. 5, "Accounting Contingencies," if the likelihood of a loss or payment is "remote," a contingent liability should be disclosed:
A) On the balance sheet
B) On the income statement
C) In the footnotes to the financial statements
D) None of the above

Question

Quizplus · Accepted Answer

A: Incorrect; this is true when the probability is "probable"
B: Incorrect
C: Incorrect; this is true when the probability is reasonably possible
D: Correct; if the probability is "remote," no mention of the liability needs to be made