Question

    Which of the following is true for provisions vs

    contingent liabilities?
    A Provisions are recognised in books when outflow probable and measurable; contingent liabilities are disclosed unless remote Correct Answer Incorrect Answer
    B Provisions are never recognised Correct Answer Incorrect Answer
    C Contingent liabilities are recognised always as liability in balance sheet Correct Answer Incorrect Answer
    D Provisions are part of equity Correct Answer Incorrect Answer

    Solution

    A provision is a liability of uncertain timing or amount that is recognized when an outflow is probable and can be reliably estimated. A contingent liability is a possible obligation that is disclosed unless the possibility of an outflow is remote.

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