Contingencies in accounting refer to potential gains and losses that are known to exist at the balance-sheet date. These outcomes will only be known after one or more future events occur or do not occur. The way these contingencies are handled in financial statements depends on their nature, and specific accounting standards provide the required guidance.
A contingent gain is an economic benefit that may be realized when a favorable event occurs, though it is not guaranteed and depends on future uncertainties.
The detailed conditions and arrangements specified within a contract, particularly relating to sales, include various elements such as price, financing, contingencies, closing costs, and personal property items included in the sale.
