BUSINESS ADMINISTRATION
FINANCIAL ACCOUNTING
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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alphabetic order
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in order of magnitude, lowest value to highest value
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from most liquid to least liquid
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from least liquid to most liquid
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Detailed explanation-1: -Option d is a valid response. Explanation: Assets are reported in the balance sheet in the order in which most liquid assets comes first then the less liquid assets.
Detailed explanation-2: -Order of liquidity is the presentation of assets in the balance sheet in the order of the amount of time it would usually take to convert them into cash. Thus, cash is always presented first, followed by marketable securities, then accounts receivable, then inventory, and then fixed assets. Goodwill is listed last.
Detailed explanation-3: -Balance Sheet Accounting Cash on hand is considered the most liquid type of liquid asset since it is cash itself. Cash is legal tender that an individual or company can use to make payments on liability obligations.
Detailed explanation-4: -Answer and Explanation: Assets are listed on the balance sheet starting with the most liquid asset to the least liquid asset. Liquidity is a term that describes how quickly an asset can be converted to cash. Assets with the highest liquidity are cash, marketable securities, and accounts receivable.
Detailed explanation-5: -Current assets are usually listed in the order of their liquidity and frequently consist of cash, temporary investments, accounts receivable, inventories and prepaid expenses. Cash is simply the money on hand and/or on deposit that is available for general business purposes.