The correct answer is option B - Disclosure.

Explanation:
Contingent liabilities are potential obligations that may arise in the future depending on the outcome of uncertain events. These liabilities are not yet certain but have a possibility of occurring. They are typically disclosed in the footnotes of the balance sheet rather than being recognized as actual liabilities on the face of the balance sheet.

There are several reasons why contingent liabilities are disclosed in the footnotes:

1. Transparency: The disclosure of contingent liabilities in the footnotes provides transparency to the users of the financial statements. It allows them to understand the potential risks and obligations that the company may face in the future.

2. Materiality: Contingent liabilities are disclosed in the footnotes if they are considered material. Materiality is the concept that states that information is material if it could influence the economic decisions of users. The disclosure of contingent liabilities in the footnotes ensures that material information is presented to users.

3. Conservatism: The disclosure of contingent liabilities in the footnotes is based on the principle of conservatism. This principle states that when there is uncertainty, the financial statements should err on the side of caution and present a more conservative picture of the company's financial position. By disclosing contingent liabilities in the footnotes, the financial statements reflect a more conservative approach.

4. Future events: Contingent liabilities are dependent on future events and may or may not become actual liabilities. By disclosing them in the footnotes, the financial statements provide information about potential future obligations that may impact the company's financial position.

In summary, contingent liabilities are shown in the footnotes of the balance sheet as per the concept of disclosure. This ensures transparency, reflects materiality, follows the principle of conservatism, and provides information about potential future obligations.