A partner makes a cash advance to the partnership which is to be repaid in three years' time. The partner does not wish this advance to be included as a capital contribution. The correct classification for this in the balance sheet is:
A) Current asset
B) Non-current asset
C) Current liability
D) Non-current liability

Question

Quizplus · Accepted Answer

This is classified as a non-current liability because it is a financial obligation that the partnership has to repay in more than one year's time, and it is not considered a contribution to the partnership's equity (capital).

A Partner Makes a Cash Advance to the Partnership Which