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Question

Which of the following is represented by an estimated amount to meet a loss or expense in future?

A Liability Correct Answer Incorrect Answer
B Accrued expense Correct Answer Incorrect Answer
C Provision Correct Answer Incorrect Answer
D Amortization Correct Answer Incorrect Answer
E Contingent liability Correct Answer Incorrect Answer

Solution

'Provision' means an estimated amount to meet a loss or expense in future. Provisions are made for future obligations whose specific amount or date is unknown.  Note –  •accrued expense is one that is known to be due in the future with certainty.  •A contingent liability is one that is dependent on happening of a future event. It is a potential liability Here the event is also uncertain.

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