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CA Intermediate · Advanced Accounting · Framework for Preparation and Presentation of Financial Statements

Pooja Retail Ltd. lists the following at year end: trade payables Rs 6,00,000 payable in 2 months; a bank loan Rs 10,00,000 repayable after 3 years; and an obligation to a supplier Rs 4,00,000 that is a settled present obligation expected to be paid within 11 months. Following the Framework definition of a liability and the current/non-current classification used in company accounts, what are the total current liabilities?

Current liabilities total Rs 10,00,000. Trade payables of Rs 6,00,000 and the supplier obligation of Rs 4,00,000 are both settled within twelve months. The Rs 10,00,000 bank loan repayable after three years is non-current and is excluded.

  1. ARs 10,00,000Correct
  2. BRs 20,00,000
  3. CRs 16,00,000
  4. DRs 6,00,000

Explanation

Liabilities due within twelve months are current: 6,00,000 + 4,00,000 = 10,00,000. The bank loan, due after 3 years, is non-current. Rs 20,00,000 includes the loan; Rs 16,00,000 excludes the supplier obligation but includes the loan wrongly.

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