Liabilities that might arise from which of the following probably would be disclosed only in the notes to the financial statements?
A)Possible warranty claims
B)Guarantees of the debt of other companies
C)Possible bankruptcy of an important customer whose account is current
D)Estimated income taxes for the current year

Question

Quizplus · Accepted Answer

Guarantees of the debt of other companies are not a direct liability of the company but rather a contingent liability. Therefore, they are typically disclosed in the notes to the financial statements. Possible warranty claims and estimated income taxes are typically disclosed in the financial statements themselves, while the possible bankruptcy of an important customer whose account is current may be disclosed in both the financial statements and the notes.

Liabilities That Might Arise from Which of the Following Probably