What is contingency?

The concept of contingency refers to uncertain situations that may or may not occur in the future. In accounting we speak of contingencies to refer to business situations that have a certain degree of uncertainty.

Contingencies in accounting matters are used to indicate both the rights and the obligations future of companies. And, although it may seem negative, contingencies are used to indicate positive future assumptions, as the least beneficial to society.

Despite their associated uncertainty, many companies record accounting contingencies in the accounting memory, although contingent assets and liabilities do not depend on the company itself.

Contingent liabilities can be based on future debts that we have, or on obligations that expire suddenly due to some cause. In the case of contingent assets, they refer to possible acquisitions that the company must carry out in the future, if certain expected situations are met.

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