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

Assertion (A):  Borrowings that are payable after 12 months or after the period of the Operating Cycle from the date of the Balance Sheet are Long-term Borrowings.
Reason (R):  Current Liabilities are those liabilities that are payable within 12 months or within the period of the Operating Cycle from the date of the Balance Sheet. Since loans that are not payable within the above period are Long-term Borrowings.

Both, Assertion (A) and Reason (R) are correct and Reason (R) is the correct explanation of Assertion (A).

Current/Non-current distinction An item is classified as current:
 if it is involved in entity’s operating cycle or,
 is expected to be realised/settled within twelve months or,
 if it is held primarily for trading or,  is cash and cash equivalent or,
 if entity does not have on unconditional rights to defer settlement of liability for atleast 12 months after the reporting period, Other assets and liabilities are non-current.


* 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