Assets are listed on the balance sheet in order of liquidity.Which of the following items reflects the normal order of liquidity?
A) Cash, Inventory, Notes receivable, Accounts receivable
B) Notes Receivable, Inventory, Accounts receivable, Cash
C) Cash, Accounts receivable, Inventory, Notes receivable
D) Plant assets, Inventory, Notes receivable, Cash

Question

Quizplus · Accepted Answer

Cash is the most liquid asset and is listed first, followed by accounts receivable which is also expected to be collected soon, inventory represents goods for sale and is less liquid than accounts receivable or cash, and notes receivable is the least liquid asset as it represents money owed to the company but may not be collected for an extended period of time. Therefore, the correct order of liquidity is Cash, Accounts receivable, Inventory, and Notes receivable. Option C reflects this order.

Assets Are Listed on the Balance Sheet in Order of Liquidity.Which