Match the following terms or phrases in (a–g) with the explanations in 1–8. Terms or phrases may be used more than once. Question 11 options: Current assets/Current liabilities Probable likelihood and estimable liability Measures the “instant” debt-paying ability of a company Current assets – Current liabilities (Cash + Temporary investments + Accounts receivable)/Current liabilities Cash + Temporary investments + Accounts receivable Probable likelihood of a liability but cannot be estimated Remote contingent liability Reasonably possible likelihood of a liability 1.Current ratio2.Working capital3.Quick assets4.Quick ratio5.Record an accrual and disclose in the notes to the financial statements6.Disclose only in notes to financial statements7.No disclosure needed in notes to financial statements

US GAAP defines contingent liabilities as: Any potential future loss that depends on a "triggering…

Answered: Match the following terms or phrases in…

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

Chapter8: Current And Contingent Liabilities

Section: Chapter Questions

Problem 70E

See similar textbooks

Related questions

Question

Match the following terms or phrases in (a–g) with the explanations in 1–8. Terms or phrases may be used more than once.

Question 11 options:

	Current assets/Current liabilities
	Probable likelihood and estimable liability
	Measures the “instant” debt-paying ability of a company
	Current assets – Current liabilities
	(Cash + Temporary investments + Accounts receivable)/Current liabilities
	Cash + Temporary investments + Accounts receivable
	Probable likelihood of a liability but cannot be estimated
	Remote contingent liability
	Reasonably possible likelihood of a liability

1.	Current ratio
2.	Working capital
3.	Quick assets
4.	Quick ratio
5.	Record an accrual and disclose in the notes to the financial statements
6.	Disclose only in notes to financial statements
7.	No disclosure needed in notes to financial statements

Definition Definition Costs that a business is responsible for paying, should a particular event potentially occur in the future. Also called a potential liability, a contingent liability is generally recorded only when the amount of liability can be reasonably estimated and the contingency is likely to occur shortly. The Generally Accepted Accounting Principles (GAAP) and International Financial Reporting Principles (IFRS) make it mandatory for the companies to record any contingent liability taking the principles of full disclosure, materiality, and prudence into consideration.

Expert Solution

Trending now

This is a popular solution!

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.