Question

Why is accrued income below prepaid insurance in balance sheet and also why is oustanding expenses below bank OD and creditors and BP
Also is interest payable on long term loan a current or non current liability

Answer 1

Dear Student,

Its just because of the format of Balance sheet some items are shown above & below.

Under Assets Category of Balance sheet are two major Heads : Non-Current Assets & Current Assets; and under those Current Assets 6 sub-categories as follows:

2	Current assets
	(a) Current investments
	(b) Inventories
	(c) Trade receivables
	(d) Cash and cash equivalents
	(e) Short-term loans and advances
	(f) Other current assets

Since prepaid expenses forms part of (e) Short term loans & Advances & Accrued income forms part of (f) Other Current Assets; Accrued Income is shown below prepaid Expenses.

Similarly , Format of Current Liabilities is as follows:

4	Current liabilities
	(a) Short-term borrowings
	(b) Trade payables
	(c) Other current liabilities
	(d) Short-term provisions

Since Bank OD is a part of (a) Short-term borrowings; and Creditors & BP part of (b) Trade Payables whereas Outstanding Expenses are part of (c) Other current Liabilities; so outstanding expenses are shown below Bank OD, Creditors & BP

Interest paid on long term loan is a current liability as it is required to be paid every month / quarter as the case may be.

Regards,