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10.2 Double Entry Book Keeping (Section A)—ISC XII

(d) Long-term Provisions
These are the provisions for liabilities that will be payable after 12 months from the date of Balance
Sheet or after the period of Operating Cycle.
4. Current Liabilities
Current Liabilities are those liabilities which are:
(a) expected to be settled in company’s normal Operating Cycle; or
(b) due to be settled within 12 months after the reporting date; (Reporting date is the date on which
financial statements are prepared); or
(c) held primarily for the purpose of being traded; or
(d) there is no unconditional right to defer settlement for at least 12 months after the reporting date.
Current liabilities are classified into: Short-term Borrowings; Trade Payables; Other Current
Liabilities; and Short-term Provisions.

(a) Short-term Borrowings
These are the borrowings which as on the date of borrowing, are repayable within 12 months from
the date of Balance Sheet or within the period of a Operating Cycle.

(b) Trade Payables
These are the amounts payable for goods purchased or services taken in the normal course of
business and are payable within 12 months from the date of Balance Sheet or within the period
of a Operating Cycle.
(c) Other Current Liabilities
These are short-term liabilities, other than short-term borrowings, trade payables and short-term provisions.

(d) Short-term Provisions
These are provisions for liabilities that will be payable within 12 months from the date of Balance
Sheet or within the period of a Operating Cycle.

5. Operating Cycle
It is the time between the acquisition of assets for processing and their realisation into Cash and
Cash Equivalents.
Where the Operating Cycle cannot be identified, it is assumed to be of 12 months.
Operating Cycle is determined for each business separately. It means a company can have more
than one Operating Cycle.
ASSETS

6. Non-Current Assets
Non-Current Assets are those assets which are not Current Assets. These are sub-classified into:
Fixed Assets; Non-Current Investments; Deferred Tax Assets (Net); Long-term Loans and Advances;
and Other Non-Current Assets.
(a) Fixed Assets
(i) Tangible Assets
These are the assets which have physical existence. Examples are: land, building, machinery,
computers, etc.