MCQ - Contingent Assets and Liabilities CA Foundation Notes | EduRev

Principles and Practice of Accounting

Created by: Srsps

CA Foundation : MCQ - Contingent Assets and Liabilities CA Foundation Notes | EduRev

 Page 1


CPT Section A Fundamentals Of Accounting Chapter 2 Unit 7 
CA.V.K.Jain 
   
Page 2


CPT Section A Fundamentals Of Accounting Chapter 2 Unit 7 
CA.V.K.Jain 
   
After studying this you will be able to: 
Understand – “contingent assets” and “contingent 
liabilities” 
Distinguish “contingent liabilities” with “liabilities” and 
“ provisions” 
Page 3


CPT Section A Fundamentals Of Accounting Chapter 2 Unit 7 
CA.V.K.Jain 
   
After studying this you will be able to: 
Understand – “contingent assets” and “contingent 
liabilities” 
Distinguish “contingent liabilities” with “liabilities” and 
“ provisions” 
Possible assets arises from past events.  
Their existence will be confirmed only after occurrence or non occurrence of 
some events. 
The events are uncertain and not within the control of enterprise. 
It usually arises from unplanned or unexpected events that give rise to 
possibility of an inflow of economic benefits. 
For example a claim lodged against a party through legal process and verdict 
of which is still awaited. 
Where outcome is uncertain, is a contingent asset. 
Page 4


CPT Section A Fundamentals Of Accounting Chapter 2 Unit 7 
CA.V.K.Jain 
   
After studying this you will be able to: 
Understand – “contingent assets” and “contingent 
liabilities” 
Distinguish “contingent liabilities” with “liabilities” and 
“ provisions” 
Possible assets arises from past events.  
Their existence will be confirmed only after occurrence or non occurrence of 
some events. 
The events are uncertain and not within the control of enterprise. 
It usually arises from unplanned or unexpected events that give rise to 
possibility of an inflow of economic benefits. 
For example a claim lodged against a party through legal process and verdict 
of which is still awaited. 
Where outcome is uncertain, is a contingent asset. 
No recognition in Financial Statements -  Prudence / Conservative Principle.  
No disclosure of Contingent Assets in Financial Statements. 
Usually disclosed in report of approving authority ,if inflow of economic benefit is 
probable. 
When realisation is virtually certain, then no longer remains as Contingent Asset.  
Assets and incomes are recognised in Financial Statements in the year which the 
change occurs.  
Usually arises from unplanned or unexpected events. 
Page 5


CPT Section A Fundamentals Of Accounting Chapter 2 Unit 7 
CA.V.K.Jain 
   
After studying this you will be able to: 
Understand – “contingent assets” and “contingent 
liabilities” 
Distinguish “contingent liabilities” with “liabilities” and 
“ provisions” 
Possible assets arises from past events.  
Their existence will be confirmed only after occurrence or non occurrence of 
some events. 
The events are uncertain and not within the control of enterprise. 
It usually arises from unplanned or unexpected events that give rise to 
possibility of an inflow of economic benefits. 
For example a claim lodged against a party through legal process and verdict 
of which is still awaited. 
Where outcome is uncertain, is a contingent asset. 
No recognition in Financial Statements -  Prudence / Conservative Principle.  
No disclosure of Contingent Assets in Financial Statements. 
Usually disclosed in report of approving authority ,if inflow of economic benefit is 
probable. 
When realisation is virtually certain, then no longer remains as Contingent Asset.  
Assets and incomes are recognised in Financial Statements in the year which the 
change occurs.  
Usually arises from unplanned or unexpected events. 
Possible obligation arises from past events, existence of which will be confirmed only by occurrence or non-
occurrence of one or more uncertain future event not within the control of enterprise; or 
Present obligation that arises from past events but is not recognised because: 
(1) It is not probable that an outflow will be required to settle the obligation. 
(2) A reliable estimate of the amount of obligation can not be made. 
No recognition of contingent liability. 
Disclosure by way of a note  to the balance sheet. 
When recognised: if it becomes probable, a provision is recognised in Financial Statements of the period in which 
change probably occurs except in the extremely circumstances where no reliable estimate can be made. 
Read More

Complete Syllabus of CA Foundation

Dynamic Test

Content Category

Related Searches

Free

,

practice quizzes

,

pdf

,

past year papers

,

Objective type Questions

,

Summary

,

Previous Year Questions with Solutions

,

MCQ - Contingent Assets and Liabilities CA Foundation Notes | EduRev

,

Viva Questions

,

Exam

,

video lectures

,

shortcuts and tricks

,

MCQ - Contingent Assets and Liabilities CA Foundation Notes | EduRev

,

Semester Notes

,

mock tests for examination

,

MCQ - Contingent Assets and Liabilities CA Foundation Notes | EduRev

,

ppt

,

Sample Paper

,

Important questions

,

study material

,

Extra Questions

,

MCQs

;