The concept of contingency, in economic terms, refers to those future situations with relevance for the company whose probability of occurring is unknown.

Contingent assets and liabilities

Although it is unknown whether these situations will ultimately occur or not, many companies keep a record of contingencies in accounting in the accounting memory, usually in the provisions section.

It is a way to be prepared for possible negative contingencies (contingent liability), such as, for example, for a possible future compensation as a result of a trial that is currently in process.

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We hope this information is very useful to you.