CameraIcon

SearchIcon

MyQuestionIcon

1

You visited us 1 times! Enjoying our articles? Unlock Full Access!

Business Studies

Other Factors Affecting Capital Structure

Contingent li...

Question

Contingent liability is ___________.

A

liability to appear within a year

No worries! We‘ve got your back. Try BYJU‘S free classes today!

B

liability to appear at the occurrence of an event

Right on! Give the BNAT exam to get a 100% scholarship for BYJUS courses

C

liability to appear after a period of time

No worries! We‘ve got your back. Try BYJU‘S free classes today!

D

liability to the proprietor

No worries! We‘ve got your back. Try BYJU‘S free classes today!

Open in App

Solution

The correct option is B liability to appear at the occurrence of an event
Contingent liability is a probable liability depends if an event happens. This is not to be shown in the balance sheet but to be disclosed to note to accounts.

Suggest Corrections

thumbs-up

0

Similar questions

Q. If a company has contingent liabilities, they appear in the __________.

Q. Contingent liability appears as a footnote in the balance sheet. This is in accordance with the accounting principle of __________.

Q. Contingent liability appears as a foot note in the balance sheet. This is in accordance with the accounting principle _____________.

Q. What Journal entries would be passed for discharge of following unrecorded liabilities on the dissolution of a firm of partners A and B:
(a) There was a contingent liability in respect of bills discounted but not matured of ₹ 18,500. An acceptor of one bill of ₹ 2,500 became insolvent and fifty paise in a rupee was recovered. The liability of the firm on account of this bill discounted and dishonoured has not so far been recorded.
(b) There was a contingent liability in respect of a claim for damages for ₹ 75,000, such liability was settled for ₹ 50,000 and paid by the partner A.
(c) Firm will have to pay ₹ 10,000 as compensation to an injured employee, which was a contingent liability not accepted by the firm.
(d) ₹ 5,000 for damages claimed by a customer has been disputed by the firm. It was settled at 70% by a compromise between the customer and the firm.

Q. What Journal entries would be passed for following unrecorded liabilities on the dissolution of a firm partners A and B:
(a) There was a contingent liability in respect of bills discounted but not matured of Rs. 18,500. An acceptor of one bill of Rs. 2,500 became insolvent and fifty paise in a rupee was recovered. The liability of the firm on accout of this bill discounted and dishonoured has not so far been recorded.
(b) There was a contingent liability in respect of claim for damages for Rs. 75,000, such liability was settled for Rs. 50,000, and paid by the partner A.
(c) Firm will have to pay Rs. 10,000 as compensation to an injured employee, which was a contingent liability not accepted by firm.
(d) Rs. 5,000 for damages claimed by a customer has been disputed by the firm. It was settled at 70% by a compromise between the custorner and the firm.

View More

Join BYJU'S Learning Program

similar_icon

Related Videos

lock

Debt and Equity

BUSINESS STUDIES

Watch in App

explore_more_icon

Explore more

Other Factors Affecting Capital Structure

Standard XII Business Studies

Join BYJU'S Learning Program

CrossIcon