BACHELOR OF BUSINESS ADMINISTRATION

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BUSINESS ADMINISTRATION

FINANCIAL ACCOUNTING

Question [CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
Which of the following items does the statement below describe¿‘A possible obligation that arises from past events and whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the entity’s control”
A
A provision
B
A current liability
C
A contingent liability
D
A contingent asset
Explanation: 

Detailed explanation-1: -A contingent liability is a possible obligation that arises from past events and the existence of which will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events .

Detailed explanation-2: -A liability is a present obligation of the entity arising from past events, the settlement of which is expected to result in an outflow from the entity of resources embodying economic benefits.

Detailed explanation-3: -A contingent liability is a potential liability that depends on a future event arising from a past transaction or event. Examples of contingent liabilities are lawsuits and government investigations.

Detailed explanation-4: -Contingent liability: a possible obligation depending on whether some uncertain future event occurs, or. a present obligation but payment is not probable or the amount cannot be measured reliably.

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