Accountancy Part BFinancial Statements of a Company

Which of the following is not included in Non-current liabilities, wh…

Which of the following is not included in Non-current liabilities, while preparing a Balance Sheet of a company :

Answer & explanation

Correct answer: option 4

The correct answer is Option (4) → Cash Credit

Non-current liabilities are borrowings repayable after more than twelve months (or the operating cycle). Loans repayable on demand are short-term borrowings and are shown under current liabilities. A cash credit is a bank borrowing repayable on demand, so it is a current liability, not a non-current one.

Option (1) Debentures — A long-term borrowing. Debentures are repayable after many years and are shown under long-term borrowings.

Option (2) Bonds — A long-term borrowing. Bonds, like debentures, are long-term loan capital.

Option (3) Public Deposits — A long-term borrowing. Public deposits accepted for more than a year are shown under long-term borrowings.

Option (4) Cash Credit — Correct. Cash credit is repayable on demand, so it is a short-term borrowing under current liabilities.

NCERT (2026-27 edition):
Borrowings – “Total borrowings are categorised into long-term borrowings, short-term borrowings and current maturities to long-term debt. Loans which are repayable in more than twelve months/operating cycle are classified as long-term borrowings on the face of balance sheet. 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.”