Which of the following is not presented under ‘current liabilities’ in the balance sheet of a company?a)Short-term borrowingsb)Deferred tax liabilitiesc)Short-term provisionsd)Trade payablesCorrect answer is option 'B'. Can you explain this answer?

Question

Which of the following is not presented under &lsquo;current liabilities&rsquo; in the balance sheet of a company?a)Short-term borrowingsb)Deferred tax liabilitiesc)Short-term provisionsd)Trade payablesCorrect answer is option 'B'. Can you explain this answer?

Answer

Deferred tax liabilities

Answer

Deferred tax liabilities

Deferred tax liabilities are not presented under 'current liabilities' in the balance sheet of a company. Here's why:

Current Liabilities
- Current liabilities are obligations that a company is expected to settle within a year or its normal operating cycle, whichever is longer.
- They include short-term borrowings, short-term provisions, and trade payables.
- These liabilities are typically settled using current assets such as cash, inventory, or accounts receivable.

Deferred Tax Liabilities
- Deferred tax liabilities, on the other hand, represent taxes that are expected to be paid in the future due to temporary differences between the accounting and tax treatment of certain items.
- They are not expected to be settled within the next year or operating cycle, so they are classified as non-current liabilities.
- Deferred tax liabilities are reported on the balance sheet under non-current liabilities.

In conclusion, while short-term borrowings, short-term provisions, and trade payables are all examples of current liabilities that are expected to be settled within a year, deferred tax liabilities are not classified as current liabilities because they are expected to be paid in the future beyond the current operating cycle.

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