A contingent liability
A) definitely exists as a liability but its amount and due date are indeterminable.
B) is accrued even though not reasonably estimated.
C) is not disclosed in the financial statements.
D) is the result of a loss contingency.

Question

Quizplus · Accepted Answer

A contingent liability is the result of a loss contingency, which means there is a potential liability that may or may not become an actual liability depending on the occurrence of an uncertain future event. The amount and due date of a contingent liability are not yet known with certainty, so it cannot be accrued or disclosed in the financial statements until the contingency becomes a liability.

A Contingent Liability