Question

    Contingent Liabilities should be reflected by a business

    organization as the possible future obligations. In which of the following statements are Contingent liabilities shown? 
    A Trial Balance Correct Answer Incorrect Answer
    B Balance Sheet Correct Answer Incorrect Answer
    C Profit and Loss Account Correct Answer Incorrect Answer
    D Cash Flow Statement Correct Answer Incorrect Answer
    E Notes to Accounts Correct Answer Incorrect Answer

    Solution

    Contingent Liabilities are not the present liabilities therefore they should not be disclosed as a Balance Sheet Item which shows the Assets and Liabilities as on date. These liabilities become proper liabilities only on the happening of an uncertain future event therefore comes under Notes to accounts. 

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