Which of these would be defined as contingent liabilities?
I. A loan from a financial institution
II. An unresolved lawsuit brought against the entity for breach of health and safety regulations
III. An agreement to act as guarantor for another firm's borrowings
IV. A bank overdraft
A) I, II, IV
B) II, III
C) I, II
D) I, III

Question

Quizplus · Accepted Answer

Contingent liabilities are potential liabilities that depend on future events. An unresolved lawsuit (II) and an agreement to act as guarantor for another firm's borrowings (III) are examples of contingent liabilities. A loan (I) and a bank overdraft (IV) are not contingent liabilities as they are currently existing liabilities.

Which of These Would Be Defined as Contingent Liabilities