Contingent liabilities, Cost Accounting

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These should be distinguished from estimated liabilities. Estimated liabilities are identified liabilities where the amount is uncertain. Contingent liabilities conversely are not liabilities at the current moment. They may turn into liabilities only on the happening of a specific event. Conversely, both the amount and the liability or obligation is uncertain till the specified event occurs in future. These may comprise items as a claim against the company contested in a court. Merely if the court offers an unfavourable verdict, it turns into a liability. They are not listed as liabilities in the body of the balance sheet. Though, if the firm wishes, this may make same provision for the same.


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