Final answer:
The statement that general risk contingencies need not be disclosed in financial statements is false. Entities must disclose significant risks and uncertainties that could affect their financial position or performance, although not all general risks might require disclosure.
Step-by-step explanation:
The statement that general risk contingencies need not be disclosed in the financial statements is false. According to accounting principles and standards such as the International Financial Reporting Standards (IFRS) and Generally Accepted Accounting Principles (GAAP), entities are required to disclose information about the risks and uncertainties that could affect the financial position or performance of the company.
Risk contingencies that have a potential financial impact or are likely to occur should be disclosed in the footnotes of the financial statements, especially if they do not meet the criteria for recognition on the balance sheet or income statement.
Disclosure of such risks allows investors and other stakeholders to better understand the potential challenges the business might face. Without this disclosure, stakeholders might not have a complete view of the company's financial health. However, the disclosure requirement typically pertains to risks that are significant and can be reasonably estimated; not all general risks may require disclosure.