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Zorluk: KolayBalance Sheet Classification of Assets and Liabilities

When preparing the statement of financial position for a sole trading business at year-end, how should an accrued expense, such as an unpaid electricity bill, be classified?

  1. Current liabilityCevap
  2. B
    Current asset
  3. C
    Non-current asset
  4. D
    Deduction from capital

Cevap

Current liability
Accrued expenses represent short-term obligations owed to creditors or service providers that must be settled within twelve months, which fits the definition of a current liability on the statement of financial position.

Adım Adım Çözüm

1
Identify the financial nature of an accrued expense
An accrued expense represents a benefit already consumed for which payment has not yet been made at the end of the period.
It constitutes a short-term obligation of the enterprise to an external party.
2
Determine the balance sheet section
Classify as a current liability.
Obligations that are expected to be settled within twelve months or one operating cycle are classified under current liabilities.

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Balance Sheet Classification of Current Liabilities
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Balance Sheet Classification of Assets and Liabilities