I have questions on current liabilities and COntinigencies

Expert Solution

Current Liabilities refers to present obligations that the business or person needs to be paid to its creditors or suppliers. These liabilities appear on the balance sheet and these are definite in nature.

Eg. You purchased some goods worth $1000 on credit for the further sale and thereafter the payment for the goods that is pending will be treated as Current Liabilities.

Contingencies refer to a future event or such circumstance that might create a liability in future will be called as a contingent liability.

For Example, your business is legally sued by your customer to pay damages to him/her for supplying a damaged/defective product.

In this case, you do not know whether there is an obligation to pay for the damages or not as the decision would be in the hands of the court.

This will be recorded if the losses are probable and the damages are identified or else it will be ignored and will be written in the notes to the accounts.

ekkarill92 answered 2 years ago

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