Discuss the principles and procedures for accounting for contingent liabilities and commitments. Explain how contingencies are recognized and measured, and the disclosure requirements for potential liabilities that may affect financial statements.

Contingent liabilities and commitments involve potential obligations that depend on future events. Explain the principles for recognizing and measuring contingencies, including the requirement for a present obligation and a probable outflow of resources. Describe the disclosure requirements for contingencies, including information about the nature of potential liabilities, estimated amounts, and uncertainties. Discuss how proper accounting and disclosure of contingencies affect financial statements and provide insights into potential future obligations.