Question content area top

Part $1$

A contingency was evaluated at

yearminus$$end

and considered to have a reasonable possibility of becoming an actual liability. If this was not reported in the notes to the financial$$ statements, what is the effect on the financial reporting of the$$ company?

Question content area bottom

Part $1$

A$.$

The net income of the company would be understated.

B$.$

The information about the transaction would be inadequately disclosed in the notes.

C$.$

The liabilities on the Balance Sheet would be understated.

D$.$

There would be no effect.