A contingency was evaluated at? year-end. Management felt it was probable that this would become an actual liability and the amount could be reasonably estimated. If this was not reported on the balance sheet or in the notes to the financial? statements, what is the effect on the financial reporting of the? company? A. The information about the transaction would be inadequately disclosed in the notes. B. The liabilities on the balance sheet would be understated. C. There would be no effect. D. The net income of the company would be understated.