ACCA Applied Knowledge · Business and Technology · Financial information provided by business
Which of the following is correctly classified as a current liability in a company's statement of financial position?
A trade payable due in 45 days is a current liability because it will be settled within twelve months of the reporting date. A four-year loan and a three-year provision are non-current, and share capital is equity rather than a liability.
- AA bank loan repayable in full in four years' time
- BA trade payable due for settlement in 45 daysCorrect
- CShare capital issued by the company
- DA provision for a lawsuit expected to be settled in three years
Explanation
Liabilities settled within the normal operating cycle or within twelve months of the reporting date are current. A 45-day trade payable qualifies. The four-year loan and the three-year provision are non-current, and share capital is equity, not a liability.
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