Final answer:
Contingent assets are not recognized in the financial statements according to the prudence concept.
Step-by-step explanation:
The statement given in the question is false. Contingent assets are not recognized in the financial statements in accordance with the prudence concept.
The prudence concept in accounting states that assets should not be recognized until they are certain, but liabilities must be recognized even if they are uncertain. Contingent assets are potential assets that would arise from uncertain events, and as per the prudence concept, they are not recognized in the financial statements until they are certain.
For example, if a company is involved in a legal case and has a chance of winning, the potential recovery from the case is considered a contingent asset. It is not recognized in the financial statements as an asset until the case is settled in the company's favor.