Which of the following is TRUE of a contingent liability?
A)It is a liability resulting from a lawsuit settled in court.
B)It is an actual liability that depends on a past event.
C)It is an actual liability that is difficult to estimate.
D)It is a potential liability that depends on a future event.

Question

Quizplus · Accepted Answer

A contingent liability is a potential liability that depends on a future event, such as the outcome of a pending lawsuit or a potential warranty claim. It is not yet an actual liability and may or may not become an actual liability depending on the occurrence or non-occurrence of the future event.

Which of the Following Is TRUE of a Contingent Liability