Read the following data of a company and answer the question.
Public deposits- ₹4,00,000
O/S Expenses- ₹10,000
Calls in advance- ₹25,000
Provision for employee benefits- ₹20,000 (maturing within operating cycle of the company)
Provision for taxation- ₹1,50,000
What will be the subhead of public deposits in the company's balance sheet?
Answer & explanation
Correct answer: option 3
The correct answer is option 3- Long term borrowings.
Public deposits come under long-term borrowings whose major head is non-current liabilities.
NON-CURRENT LIABILITIES shall include the liabilities due after one year. It has 4 sub heads:
- Long-term Borrowings: Such as Debentures, Loan from Bank, Loan from other parties, public deposits
- Deferred Tax Liabilities
- Other Long term Liabilities: Such as Premium Payable on Redemption of Debentures; Premium Payable on Redemption of Preference Shares, Public Deposits (Unless specified, it will be assumed that deposits are for more than one year.)
- Long-term Provisions: Such as Provision for Employee Benefits, Provision for Provident Fund, Provision for Warranties.