Contingent liabilities are those which are not shown in the balance sheet but they are shown as notes to balance sheet because these types of liabilities are not sure shot liability and they may or may not arise in the future for a company. Given below are contingent liability examples –
- Bank Guarantee, many people are confused whether bank guarantee is asset or liability but fact is it neither of the two.
- Claims not acknowledged as debts
- Warranties and guarantees given by the company to its customers in normal course of business
- Any loss which may arise due to court cases which is pending in the court against the company