Question

Trade Payable of a company, whose Operating Cycle Period is 18 months, is payable in 24 months, will be ______.

Options

• Current Liabilities.

• Non-current Liabilities.

• Either current liabilities or non-current liabilities.

• None of these.

Answer 1

Trade Payable of a company, whose Operating Cycle Period is 18 months, is payable in 24 months, will be non-current liabilities.

Explanation:

A liability is considered a Current Liability only if it is paid within 12 months or within the company’s normal operating cycle (whichever is longer). Since this trade payable is due in 24 months, it exceeds both the 12-month standard rule and the company’s 18-month operating cycle, making it a long-term obligation or Non-current Liability.