Question : When Period of Operating Cycle is less than 12 Months: Liabilities due for settlement (payment) within 12 months from the date of Balance Sheet are classified (shown) as ------------------
Option 1: Current liabilities
Option 2: Non – current liabilities
Option 3: Non – current assets
Option 4: None of the above
Correct Answer: Current liabilities
Solution : Answer = Current liabilities
When the period of the operating cycle is less than 12 months, liabilities due for settlement within 12 months from the date of the balance sheet are classified as current liabilities. This classification ensures that obligations expected to be settled within the short term are appropriately reflected on the balance sheet.
Hence, the correct option is 1.
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