If a contingency that is probable can be reasonably estimated,a liability is recorded and an expense is accrued.

Question

Quizplus · Accepted Answer

This statement accurately reflects the accounting principle known as the "recognition of liabilities." Under this principle, if a contingency is probable and can be reasonably estimated, a liability must be recognized and an expense must be accrued on the financial statements. This ensures that accurate and transparent reporting is provided to stakeholders.

If a Contingency That Is Probable Can Be Reasonably Estimated,a