Contingent liabilities sometimes pose an ethical challenge because they are not real liabilities and are easy to overlook.

Question

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Contingent liabilities, such as lawsuits or warranties, may not be recognized as liabilities until certain conditions are met. This can make it easy to overlook their potential impact on a company's financial statements, which could be seen as unethical. Additionally, there may be ethical considerations around how a company reports or discloses information about contingent liabilities to shareholders or other stakeholders.

Contingent Liabilities Sometimes Pose an Ethical Challenge Because They Are