Which of the following are contingent liabilities?
I. Borrowings from a financial institution
II. An agreement to act as guarantor for borrowings
III. An unresolved lawsuit brought against a newspaper for defamation

Question

Quizplus · Accepted Answer

Contingent liabilities are potential liabilities that may occur depending on the outcome of an uncertain future event. Borrowings from a financial institution are not contingent liabilities; they are actual liabilities. An agreement to act as guarantor for borrowings and an unresolved lawsuit for defamation are contingent liabilities because they depend on the outcome of future events.

Which of the Following Are Contingent Liabilities