Question

Write the word/term/phrase, which can substitute each of the following statements.

"Liability likely to arise in future on happening of certain events".

Options

• Contingent Liabilities

• Current liabilities

• Either Contingent Liabilities and Current liabilities.

• None of the above

Answer 1

Contingent Liabilities

Explanation:

Contingent liabilities are liabilities that will develop in the future if certain events occur. These are called contingent because their occurrence is contingent on the occurrence of a future event that may or may not occur (i.e. it is uncertain). As a result, they aren't included on a company's balance sheet.