CA Foundation · Accounting · Company Accounts
Menon Ltd. has the following at year end: Trade receivables ₹5,00,000 (of which ₹60,000 are outstanding for more than six months and considered good); Cash and bank ₹1,20,000; Inventories ₹3,00,000; Advance tax paid ₹40,000; Fixed deposit with bank maturing after 18 months ₹2,00,000. What is the total of Current assets?
Current assets total ₹9,60,000, comprising receivables ₹5,00,000, cash ₹1,20,000, inventories ₹3,00,000 and advance tax ₹40,000. The fixed deposit maturing after eighteen months is a non-current asset, so it is excluded from current assets.
- A₹9,60,000Correct
- B₹11,60,000
- C₹10,20,000
- D₹9,00,000
Explanation
Current assets = Receivables 5,00,000 + Cash 1,20,000 + Inventories 3,00,000 + Advance tax 40,000 = ₹9,60,000. The fixed deposit maturing after 18 months (more than 12 months) is non-current. Including it gives ₹11,60,000, which is the wrong treatment. Receivables outstanding over six months remain current as they are due within the operating cycle.
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