Contingent Liability: Definition & Meaning

Banks that issue standby letters of credit or similar obligations carry contingent liabilities. All creditors, not just banks, carry contingent liabilities equal to the amount of receivables on their books. Similarly, the guidance in ASC 460 on accounting for guarantee liabilities, which has existed for why the quick ratio is important two decades, is often … Leer más

Debits and credits definition

However, some bank and credit union accounts allow you to make overdrafts, and so do some prepaid cards. Overdrafts allow you to overspend, and then you must replace the money. Plus, you have to pay an overdraft fee for each transaction that overdraws your account. Double-entry accounting helps ensure the accuracy and integrity of financial … Leer más