Practicing Success
There are two statements marked as Assertion (A) and Reason (R). Mark your answer as per the options given below. Assertion (A): Long-term Borrowings that become due for payment within 1 2 months of within the period of the Operating Cycle from the date of the Balance Sheet are shown as Short-term Borrowings. |
Both, Assertion (A) and Reason (R) are correct and Reason (R) is the correct explanation of Assertion (A). Assertion (A) and Reason (R) are correct but the Reason (R) is not the correct explanation of Assertion (A). Both Assertion (A) and Reason (R) are incorrect. Assertion (A) is correct but the Reason (R) is not correct. |
Both Assertion (A) and Reason (R) are incorrect. |
Total borrowings are categorised into long-term borrowings, short-term borrowings and current maturities to long-term debt. (i) Loans which are repayable in more than twelve months/operating cycle are classified as long-term borrowings on the face of balance sheet. (ii) Loans repayable on demand or whose original tenure is not more than twelve months/operating cycle are classified as short-term borrowings on the face of balance sheet. |