Question

What does contingency means? And give three examples.

Auditing

Answer 1

Contingency :- Contingency may be termed as a future event which a company may need to resolve thereby causing economic loss to the Copmany. Contingencies should be recognized for only when the losses are probable and the loss can be reasonably estimated. Examples :- 1. A threatened law suit. 2. Products of company which were already sold which may cause potential damage to customers. 3. Asset expropriation.