If a company has contingent liabilities, they appear in the__________?
Correct answer: C. Notes on account to Balance Sheet
- A. Balance Sheet
- B. Directors' report
- C. Notes on account to Balance Sheet
- D. Chairman's report
Explanation
Contingent liabilities are not normally recognized as actual liabilities because their existence or amount depends on an uncertain future event. They are disclosed in the notes to the financial statements when disclosure is required.
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About Financial Statements
Financial statements present a business's financial performance and position through the income statement, statement of financial position, cash flow statement and changes in equity. Questions involve preparing and interpreting these statements, adjusting entries, depreciation, closing inventory, accrued and prepaid items, and distinguishing profit from cash flow.
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