Disclosure of a contingent liability is usually made

Question

Quizplus · Accepted Answer

A contingent liability is a potential liability that may or may not occur, depending on the outcome of a future event. As such, it is not recorded on the balance sheet but requires disclosure in the notes to the financial statements to provide users with relevant information about the company's financial status and prospects. Therefore, the most appropriate choice is C. Parenthetical disclosures are generally used to provide additional details about a specific item in the financial statements, while the management discussion section is a narrative section that provides insight into the company's operations and strategies but does not typically include specific financial information related to contingent liabilities.

Disclosure of a Contingent Liability Is Usually Made