Economics · Accounting Principles
Given below are two statements: an Assertion (A) and a Reason (R). Assertion (A): A contingent liability is disclosed in the notes to accounts but is not recognized as a liability in the Balance Sheet. Reason (R): Contingent liabilities do not meet the strict recognition criteria of being a present obligation with a probable outflow of economic resources. Select the correct answer from the options given below:
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1A is true, but R is false
- 2A is false, but R is true
- 3Both A and R are true, and R is the correct explanation of A✓
- 4Both A and R are true, but R is not the correct explanation of A
Correct answer
Both A and R are true, and R is the correct explanation of A
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