New Click here to Enroll for SIDBI MSME Expert Class by ex-GM, SBI on Nov 24

    Register

    Question

    S Ltd. took a loan from the bank for 10,00,000 to be settled within 5 years in 10 equal half yearly instalments with interest. The first instalment is due on 30.09.2021 of 1,00,000. Determine how the loan will be classified in preparation of Financial Statements of S Ltd. for the year ended 31st March 2021 according to Schedule III.

    A Long term borrowings 10,00,000 Correct Answer Incorrect Answer
    B Other-Long term borrowings 10,00,000 Correct Answer Incorrect Answer
    C Other current liabilities 2,00,000; Other-Long term borrowings 8,00,000 Correct Answer Incorrect Answer
    D Short term borrowings 2,00,000; Long term borrowings 8,00,000 Correct Answer Incorrect Answer
    E None of the above Correct Answer Incorrect Answer

    Solution

    Answer: d. Short term borrowings 2,00,000; Long term borrowings 8,00,000 In the given case, instalments due on 30.09.2021 and 31.03.2022 will be shown under the head 'short term borrowings' as current maturities of loan from bank as per Schedule III. Therefore, in the balance sheet as on 31.3.2021, 8,00,000 (1,00,000 x 8 instalments) will be shown under the heading 'Long term Borrowings' and 2,00,000 (1,00,000 x 2 instalments) will be shown under the heading ' short term borrowings.'

    Practice Next