If a Potential Loss on a Contingent Liability Is Probable

Multiple Choice

If a potential loss on a contingent liability is probable and amount of the loss can be reasonably estimated, the liability should be:

A) included in the financial statements as an actual liability.
B) disclosed in the auditor's report but not disclosed on the financial statements.
C) disclosed in footnotes but not accrued.
D) neither reported nor disclosed in footnotes.