What Are Contingent Liabilities?
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Definition of Contingent Liability
A contingent liability is a potential liability that may or may not become an actual liability. Whether the contingent liability becomes an actual liability depends on a future event occurring or not occurring.
In accounting, some contingent liabilities and their related contingent losses are:
Recorded with a journal entry
Are limited to a disclosure in the notes to the financial statements
Not recorded or disclosed
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