Contingent Liabilities Are

question 19

Multiple Choice

Contingent liabilities are:

• A) recognised in the financial statements unless the possibility of an outflow in settlement is remote.
• B) recognised in the notes to the financial statements unless the possibility of an outflow in settlement is remote.
• C) recognised in the notes to the financial statements because the possibility of an outflow in settlement is remote.
• D) not recognised in the notes to the financial statements because the possibility of an outflow in settlement is remote.

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Definitions:

Period Of Sale

The time period between when a product is listed for sale and when it is actually sold.

Partial Billings

Invoicing method where a customer is billed incrementally for partially completed work, often used in long-term projects.

Completed-Contract Method

An accounting technique where revenue and expenses of a long-term contract are recorded only when the project is completed.

Construction In Progress

An accounting term for the financial balance of construction costs attributed to assets under construction that have not yet been completed.