Question

A company has sold 10,000 tonnes of steel to its customer. The sale contract provides for a normal credit period of three months. The company’s operating cycle is six months. However, the company does not expect to receive the payment within twelve months from the reporting date. it shall be classified as___

• A. Current assets
• B. Current liabilities
• C. Non current assets
• D. None of these

Answer 1

The correct option is C

Non current assets

The same should be classified as “NonCurrent” in the Balance Sheet as the payment cycle is more than operating cycle.