How a company records or​ doesn't record a contingent liability is based on one of which three likelihoods that an event will take place in the​ future?

Question

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Part 1
A.
​unlikely, reasonably​ possible, and probable
B.
​remote, reasonably​ possible, and probable
C.
​remote, reasonably​ possible, and certain
D.
​unlikely, reasonably​ possible, and certain

Answer 1

The correct answer is:

A. unlikely, reasonably​ possible, and probable

A company evaluates contingent liabilities based on the likelihood of the occurrence of future events and classifies them into these three categories to determine whether to record the liability in the financial statements or not.