The normal order for the asset section of a classified balance sheet is
A)Current assets, prepaid expenses, long-term investments, intangible assets.
B)Intangible assets, current assets, long-term investments, property, plant and equipment.
C)Property, plant and equipment, intangible assets, long-term investments, current assets.
D)Long-term investments, current assets, property, plant and equipment, intangible assets.
E)Current assets, long-term investments, property, plant and equipment, intangible assets.

Question

Quizplus · Accepted Answer

The normal order for the asset section of a classified balance sheet is to list assets in order of liquidity, or how quickly they can be converted into cash. This means that current assets, which are already cash or will be converted into cash within a year, should come first. Long-term investments, which may take longer to convert into cash, come second. Property, plant and equipment, which are long-term assets used to generate revenue, come third. Finally, intangible assets, which have no physical substance such as patents or trademarks, come last. Therefore, the correct order for the asset section is: current assets, long-term investments, property, plant and equipment, and intangible assets.

The Normal Order for the Asset Section of a Classified