Intermediate Accounting – Liabilities and Equity quizzes
How companies account for debts, provisions and owners’ equity, from issuing bonds to distributing profits.
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A whisky distiller's operating cycle is four years. Its trade payables are due in 14 months. How are they classified?
- As noncurrent liabilities
- Split by the twelve-month cutoff
- As current liabilities
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Answer: As current liabilities
Trade payables are part of working capital used in the normal operating cycle, so IAS 1 classifies them as current even when settled more than twelve months after the reporting date.
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