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Balance Sheet

why long term...

Question

why long term provisions are consideres as debt?

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Solution

Zeba, Long-Term Provisions are shown under Non-Current Liabilities because these are payable after the period of 12 months or more than 12 months. These are external equities of the business. Therefore, considered as Long-Term Liabilities or Long-Term Debt of the business.

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Long-term provisions are shown under _____

Q. Calculate Debt to Equity Ratio from the following information:

	₹			₹
Fixed Assets (Gross)	8,40,000		Current Assets	3,50,000
Accumulated Depreciation	1,40,000		Current Liabilities	2,80,000
Non-current Investments	14,000		10% Long-term Borrowings	4,20,000
Long-term Loans and Advances	56,000		Long-term Provisions	1,40,000

Q. Total Assets to Debt Ratio = / Long-term Debts

Q. From the following information, calculate Total Assets to Debt Ratio:

	₹			₹
Fixed Assets (Gross)	6,00,000		Accumulated Depreciation	1,00,000
Non-current Investments	10,000		Long-term Loans and Advances	40,000
Current Assets	2,50,000		Current Liabilities	2,00,000
Long-term Borrowings	3,00,000		Long-term Provisions	1,00,000

_______ are categorised into long-term borrowings, short-term borrowings and current maturities to long-term debt.

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