ACCA Applied Knowledge · Financial Accounting · The main elements of financial statements
At 31 December, Zeta Co has the following balances: inventory $18,000, trade receivables $26,000, cash at bank $9,000, trade payables $21,000, a bank loan of $40,000 repayable in 3 years, and a tax liability of $7,000 due in 4 months. What are Zeta Co's total current liabilities?
Total current liabilities are $28,000, being trade payables of $21,000 plus tax payable of $7,000, both due within twelve months. The $40,000 bank loan is repayable in three years, so it is a non-current liability and is excluded.
- A$28,000Correct
- B$21,000
- C$68,000
- D$61,000
Explanation
Current liabilities are the trade payables of $21,000 plus the tax liability of $7,000 due within 12 months, giving $28,000. The loan is non-current because it is repayable in 3 years. Including it gives $68,000 (or $61,000 with the loan but not the tax), which is wrong.
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