The following items are taken from the financial statements of the Postal Service for the year ending December 31, 2015: The current assets should be listed on Postal Service's balance sheet in the following order:
A)cash, accounts receivable, prepaid insurance, equipment.
B)cash, prepaid insurance, supplies, accounts receivable.
C)cash, accounts receivable, prepaid insurance, supplies.
D)equipment, supplies, prepaid insurance, accounts receivable, cash.

Question

The following items are taken from the financial statements of the Postal Service for the year ending December 31, 2015:  The current assets should be listed on Postal Service's balance sheet in the following order:
A)cash, accounts receivable, prepaid insurance, equipment. 
B)cash, prepaid insurance, supplies, accounts receivable. 
C)cash, accounts receivable, prepaid insurance, supplies. 
D)equipment, supplies, prepaid insurance, accounts receivable, cash.

Quizplus · Accepted Answer

The current assets should be listed in the order of liquidity, which means they should be listed in the order of how quickly they can be converted to cash. Cash is the most liquid asset, followed by accounts receivable (which can be quickly converted to cash through collection), then prepaid insurance (which has a cash value), and finally supplies (which may take longer to sell or use). Therefore, the correct order for the current assets is cash, accounts receivable, prepaid insurance, and supplies.

The Following Items Are Taken from the Financial Statements of the Postal