Which one of the following is a required condition for a contingent liability to exist?
A) The amount of the future payment is known.
B) The outcome has been resolved by a current event.
C) The liability resulted from an existing condition.
D) There is a potential liability to an employee of the client.

Question

Quizplus · Accepted Answer

A contingent liability exists when the liability resulted from an existing condition, but the amount of the future payment or resolution is uncertain and dependent on a future event. Option A is incorrect because the amount of the future payment is uncertain. Option B is incorrect because the outcome has not been resolved yet. Option D is incorrect because the potential liability to an employee may or may not materialize, and it is not a necessary condition for a contingent liability to exist.

Which One of the Following Is a Required Condition for a Contingent