Which of the following is an example of a contingent liability?
A) Obligations related to product warranties.
B) Possible receipt from a litigation settlement.
C) Pending court case with a probable favorable outcome.
D) Tax loss carryforwards.

Question

Quizplus · Accepted Answer

Contingent liabilities are potential liabilities that may occur depending on the outcome of a future event. Obligations related to product warranties are a classic example because the company may have to incur costs if the products do not perform as expected, but the exact amount and timing of such costs are uncertain.

Which of the Following Is an Example of a Contingent