Question

Acceptances, endorsements and obligations on behalf of a customer will be shown as _____ in the balance sheet of a company.

• A. Other asset
• B. Other liability
• C. Borrowings
• D. Contingent liability

Answer 1

The correct option is D Contingent liability

Acceptances, endorsements and other obligations basically represents the bills accepted or endorsed by the bank on behalf of its customers. A bank has to disclose all it's acceptances, endorsements and other obligations under the head Contingent Liability on the face of the balance sheet. It's an off balance sheet item, for informative purpose.