This document discusses current liabilities and contingent liabilities. For current liabilities, dividends payable in cash to preferred stockholders are considered a current liability. For contingent liabilities, they are recorded when the future event is deemed probable and the amount can be reasonably estimated.

1. 12.      Which of the following is a current liability?
A) Preferred dividends in arrears
B) A dividend payable in the form of additional shares of stock
C) A cash dividend payable to preferred stockholders
D) All of these
13.      When is a contingent liability recorded?
A) When the amount can be reasonably estimated.
B) When the future events are deemed probable and the amount can be reasonably estimated.
C) When the future events are deemed probable.
D) When the future events will possibly occur and the amount can be reasonably estimated.
Please briefly explain why, thank you!!
Solution
12. Option