Question

What are claims or rights to receive assets (or have a liability reduced) whose existence is uncertain but which may become valid eventually?

Answer 1

Contingent liabilities are claims or rights to receive assets (or have a liability reduced) that are uncertain but may become valid eventually. These are potential obligations that are recorded in the financial statements as footnotes until they become certain.

Step-by-step explanation:

Claims or rights to receive assets (or have a liability reduced) whose existence is uncertain but which may become valid eventually are called contingent liabilities. These are potential obligations that may arise in the future depending on the outcome of certain events or circumstances. Contingent liabilities are recorded in the financial statements as footnotes and are not included in the main balance sheet until they become certain.