Day 10 About Basic Finance and Accounting Concepts Here's Some New Concepts 3. Contingent Liabilities Contingent liabilities are potential obligations that may arise depending on the outcome of a future event. These liabilities are not always guaranteed but are noted because they could impact financial statements. Examples of Contingent Liabilities: Lawsuits: Potential payments that might be required if a company loses a legal case. Product Warranties: Potential costs to repair or replace products if customers claim warranties. Environmental Liabilities: Future costs associated with cleaning up or restoring areas impacted by the company's operations. Importance of Contingent Liabilities: These help prepare for possible future expenses and give investors insight into potential financial risks.
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