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1.2 Analysis of Financial Statements—CBSE XII
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, i.e., Balance Sheet date.
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 a period of 12 months.
Operating Cycle can be different for different businesses.

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 that are repayable within 12 months from
the date of Balance Sheet or within the period of Operating Cycle.
(b) Trade Payables These are the amounts payable within the period of 12 months
from the date of Balance Sheet or within the period of Operating
Cycle for goods purchased or services taken in the ordinary course
of business. It includes Bills Payable and Sundry Creditors.
(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 or within the period of Operating Cycle from the date of
Balance Sheet.
ASSETS
6. Non-Current Assets Non-current assets are those assets which are not current assets.
These are sub-classified into: Property, Plant and Equipment and
Intangible Assets; Non-current Investments; Deferred Tax Assets (Net);
Long-term Loans and Advances; and Other Non-current Assets.
(a) Property, Plant and Equipment and Intangible Assets
(i) Property, Plant and These are the assets which have physical existence, i.e., can be seen
Equipment and touched. Examples are: land, building, machinery and
computers, etc.
(ii) Intangible Assets These are the assets which do not have physical existence, i.e.,
cannot be seen and touched. Examples are: patents, trademarks
and computer software, etc.
(iii) Capital Work-in- Capital Work-in-Progress means expenditure incurred on
Progress construction or development of tangible assets not yet complete.
(iv) Intangible Assets Intangible Assets Under Development means expenditure
Under Development incurred on development of intangible assets not yet complete.
(b) Non-Current Non-current Investments are those investments that are
Investments invested to be held for a period of more than 12 months or for a
period that is more than the period of Operating Cycle from the
date of Balance Sheet.