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Your company was recently served with a lawsuit. The outcome of the litigation will not be determined for several months, but it could result in a materially large settlement to be paid by your corporation According to GAAP, what action should you take? SELECT ONLY ONE Take no action, because it may be dismissed Provide a disclosure on financial statements regarding the pending litigation Wait for the outcome of the lawsuit to address stakeholders Ensure information regarding the lawsuit is not revealed Provide a statement to employees and stockholders

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akiran007

Answer:

According to GAAP,Provide a disclosure on financial statements regarding the pending litigation

Explanation:

According to GAAP, Provide a disclosure on financial statements regarding the pending litigation.

A statement disclosure will communicate relevant information not captured in the statement itself  to a company's stakeholders.

According  to GAAP the financial statements must have disclosure notes.

the other choices are incorrect as they do not provide any defense or protective measure against the case filed.

According to GAAP, it's vital to B. provide a disclosure on financial statements regarding the pending litigation

  • GAAP simply refers to the generally accepted accounting principles. This is vital as it provides a foundation for approved accounting methods and practices.

  • Since the company was recently served with a lawsuit and in this case, there's litigation, it's necessary to provide a disclosure on financial statements regarding the pending litigation. The is vital in order to ensure that GAAP is adhered to.

In conclusion, the correct option is B.

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