what would be the answer for both these questions

26) A restaurant is being sued because a customer claims to have found a bug in her chili. The company's lawyers believe there is only a remote possibility that the lawsuit will result in an actual liability. Which of the following actions should be taken by the company's management? A) The situation should be described in a note to the financial statements. B) The possible liability should not be shown in the financial statements. C) The liability should be estimated and accrued as an expense. D) An expense must be matched to the period in which the incident occurred. 27) A contingency was evaluated at year-end and considered to have a remote possibility of becoming an actual liability. If this was not reported on the balance sheet or in the notes to the financial statements, what effect would this have on the financial reporting of the company? A) There would be no effect. B) The liabilities on the balance sheet would be understated. C) The information about the transaction would be inadequately disclosed in the notes, D) The net income of the company would be understated