Which of the following would best describe a contingent liability?
A)an obligation to transfer services instead of cash to settle a liability
B)an obligation where the costs will be covered by insurance
C)an obligation with a high degree of uncertainty about the amount or timing of the payment
D)an obligation with a low degree of uncertainty about the amount or timing of the payment

Question

Quizplus · Accepted Answer

Contingent liabilities are potential liabilities that may occur depending on the outcome of a future event. Hence, they are characterized by a high degree of uncertainty regarding the amount or timing of the payment.

Which of the Following Would Best Describe a Contingent Liability