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From the nature of the following liability: 1. Realized in the normal operating cycle 2. Held...

From the nature of the following liability:
1. Realized in the normal operating cycle
2. Held for commercial purposes
3. Completed within 12 months after the reporting period
4. Do not have the unconditional right to postpone settlement of the liability for at least 12 months after the reporting period.

Which includes the classification of short-term liabilities are:
A. 1 and 2
B. 1,2,3 and 4
C. 1 and 3
D. 1,3, and 4

Business   Accounting   
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Answer #1

Option B: 1,2,3 and 4

As per IAS 1, Current liabilities are liabilities that are to be settled or completed dwithin a short period of time, i.e, within 12 months after the reporting period.

Such liabilities are incurred for trading or commercial purposes. Hence, due within the normal operating cycle. There is no right to postpone its settlement for more than 12 months after the reporting period.

Examples of current liabilities are creditors and bills payables (trade payables), short term loan, bank overdraft, outstanding expenses, revenue received in advance, etc.

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