Which of the following statements is NOT correct? A contingent liability with re

Question

Which of the following statements is NOT correct?

A contingent liability with remote risk is not disclosed or included in financial statements.

A contingent liability is another name for a general business risk like the possibility that a delivery driver may crash and incur damages.

A contingent liability that is reasonably possible should be disclosed in a footnote to the financial statements but not recorded in the liability section.

A contingent liability must be probable and subject to reasonable estimation before it is included as a liability on the company's balance sheet

Explanation / Answer

2nd option is incorrect.

Contingent liability is not a generalized business risk, but it is a liability which depends on occurrence or non-occurrence of another event.

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