Contingent liabilities are disclosed in financial reports:
A) in footnotes to the reports.
B) in the liability section of the balance sheet.
C) as deductions from the asset accounts they relate to.
D) in the financial expense section of the income statement.

Question

Quizplus · Accepted Answer

Contingent liabilities are potential obligations that may or may not become actual liabilities depending on future events. Therefore, they are generally disclosed in the footnotes to financial reports because they do not meet the requirements of recognition on the balance sheet or income statement.

Contingent Liabilities Are Disclosed in Financial Reports