Which of the following statement is NOT correct regarding contingencies and liabilities? Muitiple Choice When a loss contingency is probable in likelihood and reasonably estimable, this loss should be recognized as a liability. The journal entry that recognizes a loss contingency would affect the accounting equation by increasing liabilities and decreasing owners equity. Advances from customers that must be settled by future services in the coming year present llabilities to the selling compary. A future lawsuit that might be filed by some future customer presents a liability.