Fixed deposit for the term of five years will come under which of the following?

A fixed deposit for 5 years is classified as a Non Current Investment.

Classification is based on the time period criterion. Assets are classified as:

• Current Assets: Realizable within 12 months from the reporting date
• Non-Current Assets: Realizable after 12 months from the reporting date

Since the fixed deposit has a maturity period of 5 years (which is more than 12 months), it cannot be converted into cash within one year. Therefore, it qualifies as a non-current asset.

A fixed deposit represents an investment made by the business (not just a bank balance). The business invests surplus funds to earn interest income. Hence, it is shown under Non Current Investments in the Balance Sheet.

Why other options are incorrect:

Option 2 - Current Asset would be applicable only if the FD was for less than 12 months or maturing within 12 months from the balance sheet date.

Option 3 - Current Liability is incorrect because a fixed deposit is an asset (money we will receive), not a liability (money we owe to others).

Option 4 - Bank is too vague. While FDs are made with banks, "Bank" typically refers to the current bank balance (like savings account or current account), not investments.