Question

Write the word / term / phrase, which can substitute each of the following statements.

Liability likely to arise in future on happening of certain events.

Answer 1

Contingent Liabilities

Explanation: Liability likely to arise in future on happening of certain events is known as contingent liabilities. These are termed as contingent, as their occurrence is dependent upon the happening of a future event, which may or may not happen (i.e. it is uncertain). Therefore, these are not shown in a company’s Balance Sheet.