Trade payables to be settled beyond 12 months from the date of the Balance sheet or beyond the operating cycle are classified under the:
Answer & explanation
Correct answer: option 2
The correct answer is Option (2) → Other long term liabilities
Trade payables are amounts owed for goods and services bought in the normal course of business. Those due within 12 months or the operating cycle are current liabilities; those to be settled beyond 12 months are non-current and go under Other long-term liabilities.
Why the other options are incorrect
Option (1) Long term provisions — Incorrect. Provisions are amounts set aside for liabilities of uncertain amount, such as employee benefits; a trade payable is a known debt.
Option (3) Deferred tax liabilities — Incorrect. These arise from timing differences in tax, not from buying goods.
Option (4) Long term Borrowing — Incorrect. Borrowings are loans and debentures; a trade payable is not money borrowed.
NCERT (2026-27 edition): |