Question
What do you mean by 'Contingent Liabilities’? Give its two examples.
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Answer
Contingent Liabilities: These are the liabilities which will become payable 1 only on the happening of some specific event, otherwise not. The best example would be amount to be paid as compensation to some party if the company in question loses a certain case in court (ex-case related to extra payments to labourers). In this situation, two things may happen:
- If the company loses the case, it will have to pay the compensation.
- If it wins, no compensation will be paid,
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