Which of the following is NOT a current liability of a business?
Answer & explanation
Correct answer: option 3
The correct answer is Option (3) → Bills receivable
Option (1) Creditors — A current liability. Creditors are suppliers to whom the business owes money for goods bought on credit. The amount is payable within a year.
Option (2) Outstanding expenses — A current liability. These are expenses such as rent or wages that are due but not yet paid.
Option (3) Bills receivable — Not a current liability. A bill receivable is money that others owe to the business, to be received within a year. So it is a current asset, like cash and debtors.
Option (4) Advances received from customers — A current liability. The customer has already paid, so the business still owes the goods or services, usually within a year.
NCERT (2026-27 Edition): “Working Capital Apart from the investment in fixed assets every business organisation needs to invest in current assets. This investment facilitates smooth day-to-day operations of the business. Current assets are usually more liquid but contribute less to the profits than fixed assets. Examples of current assets, in order of their liquidity, are as under. “Working Capital … Current liabilities are those payment obligations which are due for payment within one year; such as bills payable, creditors, outstanding expenses and advances received from customers, etc. …” |