Name: ID: A A company has two active lawsuits at the end of the year. In Lawsuit 1, the company feels it is probable that it will win $10,000. In Lawsuit 2, the company feels that it is probable that it wll lose $6,000. At the end of the year, the company should report a: a. Contingent gain for $10,000. b. Contingent loss for $6,000. c. Net contingent loss for $4,000. d. Net contingent gain for $4,000. 37. 38. A company shipped the wrong shade of paint to a customer. The customer agreed to keep the paint upon being offered a 15% price reduction. The price reduction is an example of a: a. Sales revenue b. Sales discount. d. Sales allowance. e. Trade discount c. Sales return. 39. A company has the following transactions: 1. Receive cash from bank borrowing. 2. Provide services to customers for cash. 3. Receive cash in advance from customers for services to be provided later. 4. Provide services to customers on account. 5. Receive cash from customers for services provided earlier. ow many of these transactions result in a revenue being reported in the current period? Hint: Assume Accrual-Basis Accounting. a. d. 4 e. c. The practice of using the lower of cost or market value to evaluate inventory reflects which of the following accounting principles? a. Matching principle b. Revenue recognition. c. Conservatism. . d. Materiality. e. Historical cost Which of the following statements regarding liquidity ratios is false? a. A high current ratio generally indicates the ability to pay current liabilities on a timely basis. Providing services to customers for cash improves liquidity. The purchase of a building for cash has no effect on liquidity. As a rule of thumb, a current ratio of 1 or higher often reflects an acceptable level of liquidity All of the other statements are true. b. c. d. e