A Contingency Must Be Accrued in the Accounts and Reported

Multiple Choice

A contingency must be accrued in the accounts and reported in the financial statements when

A) the amount of the loss can be reliably estimated and it is probable that an asset is impaired or a liability incurred.
B) it is evident that an asset has been impaired or a liability has been incurred even though the amount of the loss cannot be reliably estimated.
C) it is not certain that funds will be available to settle damages that may arise from a pending lawsuit.
D) a loss is expected and its amount is uncertain.