INTERVIEW QUESTIONS ACCOUNTING PROCESS CONTINGENT ASSETS AND CONTINGENT LIABILITIES DETAILS

Question: Contingent assets usually arise from unplanned or other unexpected events: a) True b) False c) Partly True d) None

Answer: (a) True
Description: As per the concept of prudence as well as the present accounting standards, an enterprise should not recognise a contingent asset. These assets are uncertain and may arise claim which an enterprise purses through a legal proceeding. Occurrence of contingent assets is not wholly within the control of the enterprise. It usually arises from unplanned or unexpected events that give rise to the possibility of an inflow of economic benefit to the business entity. Hence, the statement is true.

(a) True
Description: As per the concept of prudence as well as the present accounting standards, an enterprise should not recognise a contingent asset. These assets are uncertain and may arise claim which an enterprise purses through a legal proceeding. Occurrence of contingent assets is not wholly within the control of the enterprise. It usually arises from unplanned or unexpected events that give rise to the possibility of an inflow of economic benefit to the business entity. Hence, the statement is true. Source: CoolInterview.com

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