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Question 8 (1 point) Which of the following is a contingency that should be accrued?
A. The company is being sued and a loss is reasonably possible and reasonably estimable.
B. The company deducts life insurance premiums from employees’ paychecks.
C. It is probable that the company will receive $100,000 in settlement of a lawsuit.
D. The company offers a two-year warranty and the expenses can be reasonably estimated.
♦ Relevant knowledge
These are events in the business world which could happen in the near future. The probability of their happening is evaluated and the amount of loss or expense that could result is calculated. They could be included in the records or made public according to these guidelines.
1 Answer