Current Assets as per Balance Sheet of companies

Item Major head Sub-head

Short term loans Current Assets Short-term
and advances loans & adv

Short-term loans and advances can be both current liabilities and current assets, depending on the perspective of the borrower or lender.

As current liabilities

From the perspective of the borrower, short-term loans and advances are considered as current liabilities because they represent obligations that must be repaid within a year or less. These types of loans are often used to finance short-term needs such as operating expenses, inventory purchases, and unexpected cash flow shortages. Examples of short-term liabilities include:

- Bank overdrafts
- Trade payables
- Short-term loans from banks or other financial institutions
- Accrued expenses
- Income tax payable
- Dividends payable

As current assets

From the perspective of the lender, short-term loans and advances are considered as current assets because they represent money that is expected to be collected within a year or less. These types of loans are often used as a way for lenders to generate income through interest charges. Examples of short-term assets include:

- Accounts receivable
- Short-term loans to other businesses or individuals
- Marketable securities
- Prepaid expenses
- Inventory

Conclusion

In summary, short-term loans and advances can be classified as current liabilities or current assets depending on the perspective of the borrower or lender. As a borrower, short-term loans and advances are considered as current liabilities because they represent obligations that must be repaid within a year or less. As a lender, short-term loans and advances are considered as current assets because they represent money that is expected to be collected within a year or less.