CMA Intermediate · Corporate Accounting and Auditing · Presentation of Financial Statements (Ind AS 1)

Which statement correctly reflects Ind AS 1 on presenting a balance sheet using a current/non-current classification versus a liquidity-based order?

Ind AS 1 requires current and non-current classification as the default. An entity departs from it only when presenting all assets and liabilities in order of liquidity gives reliable and more relevant information. It is therefore not a free choice made without regard to relevance.

1. AOrder of liquidity is compulsory for every entity with an operating cycle longer than twelve months
2. BCurrent/non-current classification is required unless a liquidity-based presentation gives reliable and more relevant information, in which case all assets and liabilities are presented in order of liquidityCorrect
3. CAn entity may freely choose either method each year without regard to relevance of the information
4. DLiquidity presentation is permitted only for entities that have no identifiable operating cycle and never for part of the balance sheet