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Question
Which one of the following contingencies must be accrued on the balance sheet?
A. The likely loss on a lawsuit that the firm's attorneys believe will be dropped.
B. The probable loss on a lawsuit that the firm's attorneys believe will be settled for $50,000.
C. The reasonably possible loss on a lawsuit that the firm's attorneys believe will be dropped.
D. The reasonably possible loss on a lawsuit that the firm's attorneys believe will be settled for $50,000.
Answer
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