Assertion :Contingent Liabilities is included in the total of the liability side of the balance sheet of a company. Reason: Contingent liabilities are those which may or may not arise in future.

Both assertion and reasoning are correct and reasoning correctly explains the assertion

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Both assertion and reasoning are correct but reasoning does not explain the assertion correctly

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Assertion is correct but reasoning is wrong

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Assertion is wrong but reasoning is correct

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Solution

The correct option is D Assertion is wrong but reasoning is correct
Contingent liabilities are probable or anticipated liabilities which may arise on the happening of an event. Contingent liabilities may or may not arise. These are not actual liability and should not be part of liabilities which are shown in financial statements of the company.
Contingent liabilities should be mentioned with notes to accounts as an information to all the stakeholders.

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