CONTINGENT LIABILITY Definition

CONTINGENT LIABILITY is: (a) A possible obligation from past events that will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the enterprise; or (b) A present obligation from past events but is not recognized because (i) it is not probable that an outflow of resources will be required to settle the obligation; or (ii) the obligation cannot be measured reliably. Some examples: in corporate reports are pending lawsuits, judgments under appeal, disputed claims, and the like, representing potential financial liability.

Learn new Accounting Terms

REGRESSIVE TAX is a tax system to where the more income that is realized the lower the tax rate becomes.

COMPLIANCE is following applicable internal control procedures, rules, or laws.

Suggest a Term