Question

A contingent liability is: Multiple Choice An obligation arising from a future event. A potential obligation that depends on a future event arising from a past transaction or event. An obligation not requiring future payment. Always of a specific amount. An obligation arising from the purchase of goods or services on credit.

Answer 1

Answer:A potential obligation that depends on a future events arising from past transactions or events

Explanation:

A firm gets involved in various transactions one of which is an events which is probable to occur in future from past transactions which occurrence depends on the occurrence or non occurence of certain future events which is beyond the firm's control. A firm normally makes a disclosure of such in his account even when the liability can be estimated example is a legal suit against the firm.

It's does not arise from future events,It may involve making future payments which is not specific and it does not involve credit purchases.