Uncertainties such as natural disasters:
A) Are not contingent liabilities because they are future events not arising from past transactions or events.
B) Are contingent liabilities because they are future events arising from past transactions or events.
C) Should be disclosed because of their usefulness to financial statements.
D) Are estimated liabilities because the amounts are uncertain.
E) Arise out of transactions such as debt guarantees.

Question

Quizplus · Accepted Answer

Natural disasters are not contingent liabilities because they are future events that do not arise from past transactions or events. Contingent liabilities must be based on past events.

Uncertainties Such as Natural Disasters