Multiple choice

If a reliable estimate of probable outflow of resources to settle a present obligation can be made, it is

  1. to be recognised as a liability

  2. to be recognised as a provision

  3. to be disclosed as a contingent liability

  4. none of these
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

 A contingent liability is a potential liability. It depends on a future event occurring or not occurring. If there is a reliable outflow of resources to settle a present obligation, it will be condsidered as contingent liability. 

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