Contingent Liabilities are the Liabilities which have Not Arisen, but May Arise upon the Happening of a certain event . In other words, the Liability itself is Uncertain . It may or may not involve the payment of money. The amount of Contingent Liability is never shown on the Liabilities Side. These are always Stated in Notes to Accounts before the Balance Sheet .
Contingent Liabilities can be Classified as :
- Claims against the Company, Not Acknowledged as Debt.
- Guarantees given by the Company.
- Other Money for which the Company is Contingently Liable.
