A certain contingent liability was evaluated at year-end, and considered to have a remote possibility of becoming an actual liability. If the accountant decided not to report it on the balance sheet or in the notes to the financial statements, this could be considered a violation of generally accepted accounting principles.

Question

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According to generally accepted accounting principles (GAAP), contingent liabilities that are considered remote do not need to be reported on the balance sheet or in the notes to the financial statements.

A Certain Contingent Liability Was Evaluated at Year-End, and Considered