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Question
What are contingent liabilities?
Answer in Brief
Solution
- A contingent liability refers to a potential obligation based on a future event. A contingent obligation refers to an unclear situation that will be settled by a future event.
- For example, the liability on bills discounted with a bank would become payable only when the debtors on whom the bills are drawn do not honour the bills on their due dates.
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Classification of Assets and Liabilities
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