GENERAL KNOWLEDGE

Detailed explanation-1: -Hence, the contingent liabilities are shown as a footnote or explanatory notes in the balance sheet of a firm as per Convention of full disclosure.

Detailed explanation-2: -A contingent liability is a liability that may occur depending on the outcome of an uncertain future event. Contingent liabilities are recorded if the contingency is likely and the amount of the liability can be reasonably estimated.

Detailed explanation-3: -A contingent liability is recorded first as an expense in the Profit & Loss Account and then on the liabilities side in the Balance sheet.

Detailed explanation-4: -Definition: A contingent liability is defined as a liability which may arise depending on the outcome of a specific event. It is a possible obligation which may or may not arise depending on how a future event unfolds. A contingent liability is recorded when it can be estimated, else it should be disclosed.

Detailed explanation-5: -A contingent liability is a liability which may or may not arise in the near future hence, its necessary for the users of the financial statements to know about any such liability which might arise in the future.