When the likelihood of an actual loss is probable,and the amount can be estimated,it should be recorded as an expense and as a liability.

Question

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This statement is correct as per the accounting principle of matching expenses with revenues. If the likelihood of an actual loss is probable and the amount can be estimated, it should be recorded as an expense in the relevant period and as a liability in the balance sheet until it is settled or paid off. This ensures that expenses are recognized in the same period when the related revenues are earned, following the accrual basis of accounting.

When the Likelihood of an Actual Loss Is Probable,and the Amount