CA Foundation · Accounting · Company Accounts
Nair Ltd. has these balances at year end: Trade receivables ₹3,00,000; Cash and cash equivalents ₹80,000; Inventories ₹2,20,000; Short-term loans and advances ₹50,000; Prepaid expenses ₹30,000 (to be shown under other current assets); Long-term loans and advances ₹1,00,000. What is the total of Current Assets as per Schedule III?
Total current assets are ₹6,80,000, being receivables, cash, inventories, short-term loans and advances and prepaid expenses added together. Long-term loans and advances of ₹1,00,000 are non-current assets under Schedule III, so they must be excluded from current assets.
- A₹7,80,000
- B₹6,80,000Correct
- C₹7,00,000
- D₹6,30,000
Explanation
Current assets = 3,00,000 + 80,000 + 2,20,000 + 50,000 + 30,000 = ₹6,80,000. Long-term loans and advances are non-current, so they are excluded. Including them gives ₹7,80,000, which is wrong.
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