INTERVIEW QUESTIONS ACCOUNTING PROCESS CONTINGENT ASSETS AND CONTINGENT LIABILITIES DETAILS

Question: Which of the following is not a contingent liability? a) Claims against the firm not acknowledged as debt b) guarantees given in respect of third parties. c) Amount due to trade creditors which is not disputed d) Bills discounted from bank

Answer: (c) Amount due to trade creditors which is not disputed
Description: A contingent liability is a possible obligation arising from past events and may arise in future depending on the occurrence or non- occurrence of one or more uncertain future events. It may also be a present obligation that arises from past events. Amount due to trade creditors which is not disputed which is not disputed does not depend on some contingency and it is a liability which can be measured reliably. Therefore it is not a contingent liability.

(c) Amount due to trade creditors which is not disputed
Description: A contingent liability is a possible obligation arising from past events and may arise in future depending on the occurrence or non- occurrence of one or more uncertain future events. It may also be a present obligation that arises from past events. Amount due to trade creditors which is not disputed which is not disputed does not depend on some contingency and it is a liability which can be measured reliably. Therefore it is not a contingent liability. Source: CoolInterview.com

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