Note – Please take our quiz ‘Quiz 18 – Contingent Assets – (Answers)‘ on this page before going through the below answers. Only the top 3% of our audience scored 10/10 in all of them.
- Name – Quiz 18 – Contingent Assets – (Answers)
- Topic – Contingent Assets
- Answers with Explanation
Q1. Gain from the possible merger is an example of a contingent asset.
Ans. The given statement is True. Any certain gain from a merger which is unavoidable is a contingent asset.
Q2. Contingent Assets are recorded in the year when they become virtually certain.
Ans. The given statement is True. Contingent assets are recorded in the same year when they are confirmed that i.e. when the gain becomes virtually certain.
Q3. Contingent Assets are treated like Contingent liabilities.
Ans. The given statement is False. Contingent assets are recorded only when there is a virtual certainty whereas a contingent liability is recorded even when it is probable. Both are treated differently.
Q4. The word ‘Contingency’ means _____.
Ans. As per the English language, the meaning of contingency is ‘possible but not certain‘.
Q5. Contingent assets should be recorded when they are probable.
Ans. The given statement is False. Contingent assets are recorded only when there is a virtual certainty and not just a probability.
Q6. Which of the following is not an example of contingent assets?
Ans. Fictitious assets are not contingent assets.
Q7. Contingent assets are also known as _____.
Ans. These items have the potential of being an asset hence they can be named ‘potential assets’.
Q8. Contingent assets are disclosed in _____.
Ans. Contingent assets are not shown in the balance sheet instead they are shown in notes to accounts or the director’s report.
Q9. Contingent assets are shown in the balance sheet.
Ans. The given statement is False. ‘Contingent assets’ are not shown in the balance sheet.
Q10. Which of the following is an example of contingent assets?
Ans. The lawsuit arises from a past event and gains from the same are dependent on future events. If it is virtually certain for e.g. “judgement passed by a judge” then it can be shown as a contingent asset.
Q11. Contingent asset is realized when it becomes _____.
Ans. Any contingent asset is realised only when it becomes virtually certain because of the principle of conservatism.
Q12. Contingent assets depend on a future _____ event.
Ans. Any contingency arises from future uncertain events.
Q13. Contingent asset is a possible _____ dependent on a future uncertain event.
Ans. It is a possible gain for the business.