Question
Write a short note on Contingent Liability.
✓
Answer
Contingent Liabilities: Contingent Liability is a liability that becomes payable on the happening of an event. In case, the event does not happen, no amount is payable. Such liabilities are not accounted and are not shown in the Balance Sheet; they are disclosed by way of a note.
Examples of contingent liabilities are:
Examples of contingent liabilities are:
- Liabilities in Respect of Bills Discounted: If the firm got its bills receivable discounted with bank, the primary liability will be that of the acceptor. If the acceptor does not pay, then it becomes firm's liability.
- Guarantee for Loan: If the firm has stood surety for a loan, it will be liable to pay the amount if the other person fails to meet his obligation.
- Disputed Claims: If some other party has lodged a claim against the firm, the firm will be liable to pay if the claim succeeds.
Need a full question paper?
Generate a complete, print-ready paper with questions like this in minutes — across 16+ boards, with answer keys.
Explore more
Similar questions
A boiler was purchased from abroad for ₹ 10,000. Shipping and forwarding charges ₹ 2,000, Import duty ₹ 7,000 and expenses of installation amounted to ₹ 1,000.
Calculate the Depreciation for the first three years (separately for each year) @ 10% p.a. on Diminishing Balance Method.
Calculate the Depreciation for the first three years (separately for each year) @ 10% p.a. on Diminishing Balance Method.
From the following information, prepare Profit and Loss Account for the year ended $31^{st}$ March, $2019$:
→Calculate Closing Stock from the following details:
From the following particulars, ascertain the value of Opening Stock:
Tiwari & Sons find that the bank balance shown by their Cash Book on 31st March, 2019 is ₹ 40,500 (credit) but the Pass Book shows a difference due to the following reasons:
- A cheque for ₹ 5,000 drawn in favour of Manohar has not yet been presented for payment.
- A post-dated cheque for ₹ 900 has been debited in the bank column of the Cash Book but it could not have been presented in any case.
- Cheques totalling ₹ 10,200 deposited with the bank have not yet been collected and a cheque for ₹ 4,000 has been dishonoured.
- A bill for ₹ 10,000 was retired by the Bank under a rebate of ₹ 150 but the full amount of the bill was credited in the bank column of the Cash Book.
What menu option is available in Gateway of Tally Screen?
Prepare a ‘Total Creditors Account with imaginary figures.
Give any three advantages of Single Entry System of Accounting.
Following information is given of an accounting year:
Opening Creditors ₹ 15,000; Cash paid to creditors ₹ 15,000; Returns Outward ₹ 1,000 and Closing creditors ₹ 12,000.
Calculate Credit Purchases during the year.
Opening Creditors ₹ 15,000; Cash paid to creditors ₹ 15,000; Returns Outward ₹ 1,000 and Closing creditors ₹ 12,000.
Calculate Credit Purchases during the year.
Ascertain Gross Profit from the following:
