INTERVIEW QUESTIONS ACCOUNTING PROCESS CONTINGENT ASSETS AND CONTINGENT LIABILITIES DETAILS

Question: Income tax demand, disputed by a company is ______ a) Contingent Liability b) Current Liability c) Long term Liability d) None of these

Answer: (a) Contingent Liability
Description: A contingent liability is a possible obligation arising from past events and may arise in future depending upon the occurrence or non occurrence of one or more uncertain future events. A contingent liability may also be a present obligation that arises from past events.The outcome of the disputed income tax demand is uncertain and may result into outflow of economic resources hence it is a contingent liability.

(a) Contingent Liability
Description: A contingent liability is a possible obligation arising from past events and may arise in future depending upon the occurrence or non occurrence of one or more uncertain future events. A contingent liability may also be a present obligation that arises from past events.The outcome of the disputed income tax demand is uncertain and may result into outflow of economic resources hence it is a contingent liability. Source: CoolInterview.com

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