Question

Company set aside a certain amount of money to pay off a two-year long term loan....

Company set aside a certain amount of money to pay off a two-year long term loan. these cash are thus restricted. under which section of the balance sheet is this ‘cash restricted for future loan payment’ reported?

  1. Current assests

b.   non-current assets

  1. current liabilities
  2. stockholders equity

I COULDNT SEE THE WHOLE QUESTIONS SO SOME WORDS MAY NOT MAKE SENSE BUT ITS THE OVERALL IDEA OF THE QUESTION

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Answer #1

Certain amount of money is set aside for pay off a two year long term loan. Since the loan period is more than 12 months, it is not considered as a current liability. Similarly the amount set aside to pay this long term long is treated as non current assets.

Option b.

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