Disclosure of a contingent liability is usually made
A) parenthetically, in the body of the balance sheet.
B) parenthetically, in the body of the income statement.
C) in a note to the financial statements.
D) in the management discussion section of the financial statements.

Question

Quizplus · Accepted Answer

Contingent liabilities are uncertainties that might become actual liabilities in the future. They are disclosed in the notes to the financial statements, which provide additional information and disclosures beyond those presented on the face of the financial statements. This disclosure helps users of financial statements to understand the nature and extent of contingent liabilities and assess the potential risks and uncertainties that may affect the company's financial position and performance. Therefore, the most appropriate choice is option C.

Disclosure of a Contingent Liability Is Usually Made