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Contingent Liabilities Quiz

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1. What are contingent liabilities primarily dependent upon?

2. Under IAS 37 Provisions, Contingent Liabilities and Contingent Assets, a contingent liability is recognized in the financial statements when:

3. Which of the following best describes a provision, as distinguished from a contingent liability?

4. Contingent liabilities must be disclosed in the notes to the financial statements when:

5. A company is involved in a lawsuit with a very uncertain outcome. How should this be accounted for in its financial statements?

6. When can a contingent liability be classified and reported as a provision?

7. Which statement is true regarding the disclosure of contingent liabilities?

8. In the context of contingent liabilities, what is meant by 'a possible obligation'?

9. A company has been fined by a regulatory body, but the final amount of the fine depends on the outcome of an appeal. How should this be treated in financial statements?

10. How are contingent liabilities associated with warranties typically accounted for in financial statements?