Which of the following is an example of an estimable probable contingency?
A) FICA Taxes Payable
B) Income Taxes Payable
C) Warranty Payable
D) Accounts Payable

Question

Quizplus · Accepted Answer

A probable contingency is an existing condition or situation involving uncertainty that the outcome will ultimately be resolved when one or more future events occur. Of the options provided, only Warranty Payable is an example of an estimable probable contingency. This is because it involves an uncertain future event (the potential occurrence of warranty claims), but the estimated amount of the liability can be reasonably estimated based on past experience and other information. The other options, such as FICA Taxes Payable and Income Taxes Payable, are liabilities that are certain and fully quantifiable based on existing laws and regulations. Accounts Payable, while uncertain in terms of the exact amount of each payment, is generally not considered a probable contingency because it does not involve an uncertain future event.

Which of the Following Is an Example of an Estimable