Match each of the following items with the term or phrase (a-g) that best describes it. Terms or phrases may be used more than once.
-Probable likelihood of a liability but cannot be estimated
A)Current ratio
B)Working capital
C)Quick assets
D)Quick ratio
E)Record an accrual and disclose in the notes to the financial statements
F)Disclose only in notes to financial statements
G)No disclosure needed in notes to financial statements

Question

Quizplus · Accepted Answer

The correct match for "Probable likelihood of a liability but cannot be estimated" is to "Disclose only in notes to financial statements." This is because when a company cannot estimate the amount of a probable liability, it should disclose the nature of the contingency and an estimate of the possible financial effect in the notes to the financial statements, if possible.

Match Each of the Following Items with the Term or Phrase