How will you classify the following information in the balance sheet of a company?

The operating cycle is 15 months and the expected period of payment of trade payables is 12 months.

Current Liability

The correct answer is option 4- Current Liability.

The period of the operating cycle is irrelevant if the expected period is less than or up to 12 months. So, it is classified under current nature category. Here, trade payables are given and expected period of payment is given which are related with the liability of the company. So, it is a current liability.

OTHER OPTIONS-

• Current Liabilities: These are obligations that are expected to be settled within one year or within the normal operating cycle of the business. Current liabilities include accounts payable, outstanding expenses etc.

• Current Assets: These are assets that are expected to be converted into cash or used up within one year or within the operating cycle of the business, whichever is longer. Examples include cash, accounts receivable etc.

• Non-current Assets: Those assets which are not expected to be converted into cash or used up within one year. Non-current assets  include property, plant, equipment, intangible assets (like patents or copyrights), and other assets with a useful life exceeding one year. These assets are held for long-term use and are not intended for sale in the normal course of business.

• Non-current liabilities: Non-Current Liabilities are long-term debts a company owes that don't need to be repaid within a year. These liabilities are spread out over several years.