In response to questions regarding credit ratings, accrued liabilities and contingent liabilities, Jenny Chen, a credit analyst made the following statements:

Statement $1$: If accrued liabilities are overestimated in the current period, the reported income in a following period will be lower than it should be$.$

Statement $2$: Contingent liabilities that are $$probable$$ and can be reasonably estimated are recorded on the balance sheet as a liability and as an expense in the income statement.

Statement $3$: Higher credit$-$rated borrowers receive lower interest rates than lower credit$-$rated borrowers, but the differences are typically not significant.

Chen is incorrect with respect to: