alleryBills receivable shown as ₹20,000 in trial balance; ₹5,000 discounted but not yet matured at year end. Contingent liability:
A₹15,000 bills total
B₹25,000 total bills
C₹5,000 contingent only
DZero contingent value
Answer & Solution
Correct answer: C. ₹5,000 contingent only
1. Bills discounted but not matured create a contingent liability (if dishonoured later).
2. Amount of contingent liability = ₹5,000.
3. Bills receivable balance in books is reduced by ₹5,000 (now bank's risk).
_Source: ICAI BoS Foundation Paper 1, Ch 7 U1 "Final Accounts", §1.5 contingent liabilities_
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