Off-balance-sheet items are
A)items omitted from the short form balance sheet.
B)contingent assets and liabilities.
C)risk-free assets and liabilities.
D)exceptionally risky assets and liabilities.

Question

Quizplus · Accepted Answer

Off-balance-sheet items refer to contingent assets and liabilities that are not recorded on the balance sheet but may impact a company's financial position in the future. These items include items such as warranties, leases, and pending legal cases that may result in future costs or revenues. Therefore, option B is the correct answer. Option A is incorrect as off-balance-sheet items are not omitted from the balance sheet, but rather not recorded on it. Option C is incorrect as off-balance-sheet items do not necessarily represent risk-free assets or liabilities. Option D is incorrect as off-balance-sheet items include all types of contingent assets and liabilities, not just those that are exceptionally risky.

Off-Balance-Sheet Items Are