Accounting Process-Books of Accounts - Contingent Assets and Liabilities [CA (Chartered Accountant) Foundation Principles of Accounting]: Questions 1 - 3 of 5
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Question 1
Question MCQ▾
Which of these statement (s) are correct about contingent assets?
Choices
Choice (4) | Response | |
---|---|---|
a. | The term contingent is used when the outcome of a condition is uncertain | |
b. | A legal case of compensation whose judgment will be declared after the balance sheet date is an example | |
c. | When the term contingent is used as a prefix to asset it means the asset is a possible asset to the enterprise | |
d. | All a., b. and c. are correct |
Question 2
Question MCQ▾
Differentiate between a liability and a contingent liability?
Choices
Choice (4) | Response | |
---|---|---|
a. | Liability is a present obligation arising from past events of an enterprise Whereas a Contingent liability is an obligation whcih may or may not arise | |
b. | In Liability, there is certainty in the amount of outflow from the enterprises Whereas in Contingent liability there is no certainty on the amount of outflow from the enterprise | |
c. | Disclosures are shown in Liability Whereas Disclosures are not shown in a Contingent liability | |
d. | Both a. and b. are correct |
Question 3
Question MCQ▾
Which one of these is not a difference between Provision and Contingent liability?
Choices
Choice (4) | Response | |
---|---|---|
a. | Provision is a present liability of an uncertain amount Whereas Contingent liability is a possible obligation | |
b. | Provision doesn՚t meet the recognition criteria Whereas Contingent liability does meet the recognition criteria | |
c. | Disclosure is shown as a liability in the balance sheet Whereas Contingent liability is not shown at all | |
d. | All a., b. and c. are correct |