The entry to accrue a loss contingency would:
A) debit an estimated loss and credit an estimated liability.
B) debit an estimated loss and credit an asset.
C) debit an asset and credit an estimated liability.
D) None of these answers are correct.

Question

Quizplus · Accepted Answer

Accruing a loss contingency involves recognizing an estimated loss and creating a liability for that loss. Therefore, the correct entry would be to debit an estimated loss and credit an estimated liability. The other choices are incorrect because they do not reflect the proper accounting treatment for a loss contingency.

The Entry to Accrue a Loss Contingency Would