Answered: Which of the following statements is…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Related questions

Question

Which of the following statements is true concerning contingent liabilities?

a. Such liabilities should include obligations of known existence but of unknown amount.

b. If the definite amount is involved, it is not a contingent liability.

c. Such liabilities are generally reported and totaled with other liabilities to make up the liability section of most balance sheets.

d. Such liabilities should include obligations known in amount but unknown in existence.

Definition Definition Costs that a business is responsible for paying, should a particular event potentially occur in the future. Also called a potential liability, a contingent liability is generally recorded only when the amount of liability can be reasonably estimated and the contingency is likely to occur shortly. The Generally Accepted Accounting Principles (GAAP) and International Financial Reporting Principles (IFRS) make it mandatory for the companies to record any contingent liability taking the principles of full disclosure, materiality, and prudence into consideration.

Expert Solution