There are two statements marked as Assertion (A) and Reason (R). Mark your answer as per the options given below.

Assertion (A):  Borrowings taken during the year that are due for payment within 12 months or within the period of the operating cycle from the date of the Balance Sheet are shown as Short-term Borrowings.
Reason (R): Schedule III of the Companies Act, 2013 prescribes that a borrowing taken during the year which is due for payment within 12 months or within the period of the Operating Cycle from the date of the Balance Sheet shall be shown as the Current Maturities of Long-term Debts.

Only Assertion (A) is correct

The correct answer is option 4- Only Assertion (A) is correct.

Assertion (A):  Borrowings taken during the year that are due for payment within 12 months or within the period of the operating cycle from the date of the Balance Sheet are shown as Short-term Borrowings. THIS IS TRUE.

Reason (R): Schedule III of the Companies Act, 2013 prescribes that a borrowing taken during the year which is due for payment within 12 months or within the period of the Operating Cycle from the date of the Balance Sheet shall be shown as the Current Maturities of Long-term Debts. THIS IS FALSE as it is a short term borrowing.

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.
(iii) Current maturities to long-term loan include amount repayable within twelve months/operating cycle under other current liabilities with Note to Account.