Explanation:

Liability which may or may not arise depending upon the happening or non happening of an event is ‘ Contingent Liability’. There is no guarantee that liability arises but there might be a possibility of a liability arising.

As far as bills which are discounted are concerned , since they have not yet matured i.e. the collections have not yet materialized and if there is a possibility of non collections , they are shown as ‘ Contingent Liability ‘ hinting at the possible liability which may arise because of possession of discounted bills which have not yet matured