CA Foundation Exam > CA Foundation Questions > Which of the following is not a contingent li...
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Which of the following is not a contingent liability?
- a)Uncalled liability on partly paid shares
- b)Claims against the company not acknowledged as debts
- c)Arrears of cumulative fixed dividends
- d)Debts included in debtors which are doubtful in nature
Correct answer is option 'D'. Can you explain this answer?
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Which of the following is not a contingent liability?a)Uncalled liabil...
Not a Contingent Liability
Debts included in debtors which are doubtful in nature is not a contingent liability.
Explanation
A contingent liability is a potential obligation that may arise from a past event, depending on the occurrence or non-occurrence of one or more uncertain future events. It is not a present obligation, but it may become one in the future, depending on certain conditions.
The other options listed are examples of contingent liabilities:
- Uncalled liability on partly paid shares: This is a liability that shareholders may be required to pay in the future if the company needs additional funds. It is a contingent liability because it depends on the company's future funding requirements.
- Claims against the company not acknowledged as debts: These are potential liabilities that may arise from lawsuits, disputes, or other legal claims against the company. They are contingent liabilities because they depend on the outcome of legal proceedings.
- Arrears of cumulative fixed dividends: These are dividends that the company may be required to pay in the future if it has not paid them in the past. They are contingent liabilities because they depend on the company's future profitability.
Debts included in debtors which are doubtful in nature are not contingent liabilities because they are already present obligations that the company owes to its creditors. However, they may be considered as bad debts or impaired debts if the company is unable to collect them in the future.
Debts included in debtors which are doubtful in nature is not a contingent liability.
Explanation
A contingent liability is a potential obligation that may arise from a past event, depending on the occurrence or non-occurrence of one or more uncertain future events. It is not a present obligation, but it may become one in the future, depending on certain conditions.
The other options listed are examples of contingent liabilities:
- Uncalled liability on partly paid shares: This is a liability that shareholders may be required to pay in the future if the company needs additional funds. It is a contingent liability because it depends on the company's future funding requirements.
- Claims against the company not acknowledged as debts: These are potential liabilities that may arise from lawsuits, disputes, or other legal claims against the company. They are contingent liabilities because they depend on the outcome of legal proceedings.
- Arrears of cumulative fixed dividends: These are dividends that the company may be required to pay in the future if it has not paid them in the past. They are contingent liabilities because they depend on the company's future profitability.
Debts included in debtors which are doubtful in nature are not contingent liabilities because they are already present obligations that the company owes to its creditors. However, they may be considered as bad debts or impaired debts if the company is unable to collect them in the future.
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Which of the following is not a contingent liability?a)Uncalled liabil...
Contingent liabilities are potential liabilities i.e. it may or may not happen. Option D is correct as the amount of contingent liability in this case is estimated. It is shown in the debit side of P&L a/c as Provision for bad and doubtful debt but if a liability is to be classified as contingent liability then one of the main criteria is that the amount can't be estimated as option d doesn't satisfy this criteria, it's the correct answer
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Which of the following is not a contingent liability?a)Uncalled liability on partly paid sharesb)Claims against the company not acknowledged as debtsc)Arrears of cumulative fixed dividendsd)Debts included in debtors which are doubtful in natureCorrect answer is option 'D'. Can you explain this answer?
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Which of the following is not a contingent liability?a)Uncalled liability on partly paid sharesb)Claims against the company not acknowledged as debtsc)Arrears of cumulative fixed dividendsd)Debts included in debtors which are doubtful in natureCorrect answer is option 'D'. Can you explain this answer? for CA Foundation 2024 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about Which of the following is not a contingent liability?a)Uncalled liability on partly paid sharesb)Claims against the company not acknowledged as debtsc)Arrears of cumulative fixed dividendsd)Debts included in debtors which are doubtful in natureCorrect answer is option 'D'. Can you explain this answer? covers all topics & solutions for CA Foundation 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Which of the following is not a contingent liability?a)Uncalled liability on partly paid sharesb)Claims against the company not acknowledged as debtsc)Arrears of cumulative fixed dividendsd)Debts included in debtors which are doubtful in natureCorrect answer is option 'D'. Can you explain this answer?.
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