Question

Contingent liabilities appear on a not-for-profit organization’s balance sheet and are explained in the notes to...

Contingent liabilities appear on a not-for-profit organization’s balance sheet and are explained in the notes to the financial statements. TRUE/ FALSE

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Answer #1

False, as contingent liabilities are not shown in the not-for-profit organisation's balance sheet and are only explained in the notes to the financial statements.

We know contingent liabilities are possible obligation arising from the past events whose occurence will be confirmed by the occurence or non occurence of future uncertain events. Further it represents a possible obligation which is not recognised because it is not probable that outflow of economic resources will be made or amount of the same cannot be determined. So in order to record it we only make disclosures in the notes accompanying financial statements of an entity.

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