A contingent liability or asset whose existence and amount has to be confirmed by some future event:
A)should be disclosed in a note to the financial statements.
B)should be reported as a provision in the body of the financial statements.
C)may be reported in the body of the financial statements.
D)should not be reported or disclosed.

Question

Quizplus · Accepted Answer

Contingent liabilities or assets need to be disclosed in a note to the financial statements if their existence and amount have not been confirmed by a future event. This is in accordance with the Generally Accepted Accounting Principles (GAAP) and helps provide transparency to users of the financial statements. Reporting them as provisions in the body of the financial statements or not reporting them at all would not provide the necessary information to users.

A Contingent Liability or Asset Whose Existence and Amount Has