Question

A liability which arises only on the happening of some event is called ________.

• A. current liability
• B. contingent liability
• C. outstanding liability
• D. fixed liability

Answer 1

Answer: (B)

contingent liability

Contingent liabilities are costs that the organisation will have to face if a particular event occurs, or present liabilities that are unable to be measured with sufficient reliability to be recorded in the financial statements. Typically, contingent liabilities consist of guarantees and indemnities, uncalled capital and legal disputes and claims.