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 statement.

Question

Quizplus · Accepted Answer

Disclosure of a contingent liability is usually made in a note to the financial statements. Contingent liabilities are potential liabilities that arise from past events, but their existence is uncertain and depends on the occurrence or non-occurrence of one or more future events. Examples of contingent liabilities include pending lawsuits or product warranties. To provide full and fair disclosure, companies should disclose any material contingent liabilities in the notes to their financial statements.

Disclosure of a Contingent Liability Is Usually Made