2.10 - Liabilities



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Why are Taxes included in non-current liabilities though we pay them for this particular quarter/year??

And if loan in current liabilities is 1,00,000..why hasn't the non-current loan decreased to 24,00,000..bcz we finally end up calculating an increase in Total Liabilities.

4 Answer(s)


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You are right about the 24,00,000. We will fix that in the video.

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typically tax is a current liability in an annual balance sheet since it has to be paid in the same year. since the balance sheet in the video was for 1 month and the tax was not going to be paid after a few months we showed it as a non-current liability.

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@Binny I am a bit confused here. Do you mean to say that since the balance sheet is just for a month the Tax liability which was not going to be paid for a few months got classified as long term/non current liability ?
And had it been the case of annual B/S it would have remained as current liability ?
The balance sheet gives us the status of a company's assets and liabilities as of the Balance sheet date. What does balance sheet 'for one month' mean ?

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Aditya - Good question. You are right B/S is a snapshot as of a specific date. Taxes such as payroll taxes are typically classified as current liabilities since they will come due in the upcoming financial year.

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