Question Details

When is a contingent liability recorded



1.	Which of the following gives rise to the requirement to accrue a liability for the cost of compensated absences?
a.	Payment is probable.
b.	Employee rights vest or accumulate.
c.	Amount can be reasonably estimated.
d.	All of these answers are correct.

	2.	Under what conditions is an employer required to accrue a liability for sick pay?
a.	Sick pay benefits can be reasonably estimated.
b.	Sick pay benefits vest.
c.	Sick pay benefits equal 100% of the pay.
d.	Sick pay benefits accumulate.

	3.	Which of the following taxes does not represent a common employee payroll deduction?
a.	Federal income taxes.
b.	FICA taxes.
c.	State unemployment taxes.
d.	State income taxes.

4.	What is a contingency?
a.	An existing situation where certainty exists as to a gain or loss that will be resolved when one or more future events occur or fail to occur.
b.	An existing situation where uncertainty exists as to possible loss that will be resolved when one or more future events occur.
c.	An existing situation where uncertainty exists as to possible gain or loss that will not be resolved in the foreseeable future.
d.	An existing situation where uncertainty exists as to possible gain or loss that will be resolved when one or more future events occur or fail to occur.

	5.	When is a contingent liability recorded?
a.	When the amount can be reasonably estimated.
b.	When the future events are probable to occur and the amount can be reasonably estimated.
c.	When the future events are probable to occur.
d.	When the future events will possibly occur and the amount can be reasonably estimated.





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