BACHELOR OF BUSINESS ADMINISTRATION

Previous
Next

BUSINESS ADMINISTRATION

FINANCIAL ACCOUNTING

Question [CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
Which of the following statements about contingent assets and contingent liabilities are correct?1-A contingent asset should be disclosed by note if an inflow of economic benefits is probable.2-A contingent liability should be disclosed by note if it is probable that a transfer of economic benefits to settle it will be required, with no provision being made.3-No disclosure is required for a contingent liability if it is not probable that a transfer of economic benefits to settle it will be required.4-No disclosure is required for either a contingent liability or a contingent asset if the likelihood of a payment or receipt is remote.
A
1 and 4 only
B
2 and 3 only
C
2, 3 and 4
D
1, 2 and 4
Explanation: 

Detailed explanation-1: -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.

Detailed explanation-2: -Answer and Explanation: Option (c) is correct. A contingent liability is an obligation that has a possibility to occur in the future. It is generally disclosed in the footnotes of the financial statements.

Detailed explanation-3: -2. A contingent liability should be disclosed by note if it is probable that a transfer of economic benefits to settle it will be required, with no provision being made. 3.

Detailed explanation-4: -Answer and Explanation: The correct answer is a. It is a potential liability that depends on a future event. Contingent liability is a potential liability, which means that it may occur or not, depending on the result of a future event.

There is 1 question to complete.
Previous
Next