Which of the following is NOT an example of a contingent liability?
A) Income tax disputes
B) Writing off a bad debt
C) Product warranties
D) Pending legal action for patent infringement, product liability or other actions

Question

Quizplus · Accepted Answer

Writing off a bad debt is not a contingent liability because it represents an actual loss that has already occurred and has been recognized on the financial statements. A contingent liability is a potential liability that depends on the outcome of future events, such as income tax disputes or legal actions. Product warranties are also a good example of contingent liabilities because they represent a potential future cost that depends on how many customers make warranty claims.

Which of the Following Is NOT an Example of a Contingent