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Financial Forensics · Quiz 1 · 23 Feb 2025 · January 2025 term

Question 4: ABC Limited, an FMCG company specializing in cosmetics, i…

Question 4

+1 markOne correct option

ABC Limited, an FMCG company specializing in cosmetics, is currently facing a lawsuit from a consumer demanding INR 5,00,000 for allegedly misleading consumers with misinformation. With the verdict still pending, how should the company reflect this situation in the balance sheet and P&L statement for the quarter in which the lawsuit was filed?

  1. A

    Cash balance would reduce by INR 5,00,000 to account for the law suit.

  2. B

    Expenses would increase by INR 5,00,000

  3. C

    No impact in balance sheet and P&L statement

  4. D

    Cash balance would reduce by INR 5,00,000 and expenses would increase by the same amount to account for the law suit.

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Correct answer

  • C

    No impact in balance sheet and P&L statement

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Question 4 of 17 in the IIT Madras BS Financial Forensics (Financial Forensics) Quiz 1 paper sat on 23 Feb 2025, in the January 2025 term (IIT M DEGREE AN EXAM QDB2 23 Feb 2025). It carries 1 mark.

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