Interest Receivable as Current Asset Steps:

• Recognize that interest owed to Marek on the loan to his employee is interest receivable, an asset under accrual accounting.
• Record interest income in the income statement, which increases profit for the year.
• Classify interest receivable as a current asset in the statement of financial position since it's expected to be received within one year.
• Conclude the net effect: profit rises, and current assets increase by $200.

Why B is correct:

• Interest receivable meets the definition of a current asset (IAS 1: monetary asset collectible within 12 months), directly increasing current assets on the balance sheet.

Why the others are wrong:

• A: Recording the receivable increases, rather than decreases, the current asset balance.
• C: Receivables reduce net liabilities indirectly but do not decrease current liabilities, which are obligations owed by the entity.
• D: This is an asset, not a liability, so it does not increase current liabilities.

Final answer: B