O Level Accounting (7707)•7707/11/M/J/25
Explanation
Current liabilities are obligations due within one year
Steps:
- Recall that current liabilities are short-term debts payable within 12 months.
- Evaluate each option based on its nature and repayment timeline.
- Identify bank overdraft as a short-term borrowing from a bank.
- Confirm it meets the current liability criteria unlike the others.
Why A is correct:
- Bank overdraft is a current liability per accounting standards (e.g., IAS 1), as it represents an immediate, repayable debt to the bank within one year.
Why the others are wrong:
- B. Commission receivable is an asset, representing money owed to the business.
- C. Mortgage loan on a property is a long-term liability, typically repayable over many years.
- D. Provision for doubtful debts is a contra-asset account that reduces accounts receivable, not a liability.
Final answer: A
Topic: Other payables and other receivables
Practice more O Level Accounting (7707) questions on mMCQ.me