Which of the following items results in a contingent liability?
A)Income tax expense
B)A lawsuit filed against a company
C)Interest expense
D)Advertising expense

Question

Quizplus · Accepted Answer

A contingent liability is a potential liability that has arisen as a result of a past transaction or event.Its ultimate outcome will not be known until a future event occurs or fails to occur.When a lawsuit is filed against a company,it isn't certain if the company is liable or if the company is later found to be liable,or what the extent of the liability will be.

Which of the Following Items Results in a Contingent Liability