Question

Contingent liability is shown due to________________.

• A. Convention of full disclosure
• B. Convention of conservatism
• C. Convention of materiality
• D. Dual aspect concept

Answer 1

The correct option is A Convention of full disclosure

Contingent liability is shown due to the convention of full disclosure. The convention of full disclosure requires that all material facts should be disclosed in the financial statements.

A contingent liability is a liability which may or may not arise in the near future hence, its necessary for the users of the financial statements to know about any such liability which might arise in the future.