Match the following terms to the appropriate definition.
a. Commitment
b. Contingent liability
c. Loss contingency
d. Iron curtain approach
1. A contractual obligation to carry out a transaction at specified terms in the future. Material commitments should be disclosed in the financial statements.
2. A possible liability, stemming from past events, that will be resolved as to existence and amount by some future event.
3. A possible loss, stemming from past events, that will be resolved as to existence and amount by some future event.
4. An approach to making materiality judgments that quantify the total likely misstatement as of the current year-end based on the effects of reflecting all misstatements (including projecting misstatements where appropriate) existing in the balance sheet at the end of the current year, irrespective of whether the misstatements occ