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

Question

Quizplus · Accepted Answer

A contingent liability is a potential liability that depends on a future event. This event may or may not happen, and the occurrence and amount of the liability are uncertain. Examples of contingent liabilities include lawsuits, warranties, and environmental liabilities.

Which of the Following Is TRUE of a Contingent Liability