Question

Loss contingencies can be identified as what 3 areas?

Answer 1

Loss contingencies can be identified as three areas: likely losses, possible losses, and remote losses.

Step-by-step explanation:

Loss contingencies can be identified as three areas:

1. Likely losses: These are losses that are probable and can be reasonably estimated. For example, if a company is involved in a lawsuit and it is likely that they will have to pay damages, this would be a likely loss.
2. Possible losses: These are losses that are more than remote but less than likely. They are not probable, but there is a chance that they may occur. For example, if a company is being investigated by a regulatory agency, there is a possibility that they may incur fines.
3. Remote losses: These are losses that are not likely to occur. They have a very low probability of happening. For example, if a company has insurance for a rare event that is highly unlikely to happen, this would be a remote loss.