Question

Liability in respect of a pending suit is an example of _______________.

• A. Current liability
• B. Long term liability
• C. Contingent liability
• D. Current asset

Answer 1

The correct option is C Contingent liability

Contingent Liabilities : These are anticipated liabilities. These are uncertain and may or may not arise in future on the happening of a certain event. If the contemplated event occurs, a contingent liability becomes a real liability. Liability on bills discounted, disputed claims or liability under a damage suit, guarantee for a loan is examples of contingent liabilities.