The assets section of the balance sheet normally presents assets in
A) alphabetical order
B) the order of largest to smallest dollar amounts
C) the order in which they will be converted into cash or used in operations
D) the order of smallest to largest dollar amounts

Question

Quizplus · Accepted Answer

The assets section of the balance sheet is typically presented in the order in which they will be converted into cash or used in operations, known as the order of liquidity. This means that the most liquid assets, such as cash and cash equivalents, are listed first, followed by short-term investments, accounts receivable, inventory, property, plant, and equipment, and then long-term investments and other non-current assets. This order is important for users of the balance sheet to understand the company's ability to meet its short-term obligations and the availability of resources for long-term growth. Alphabetical order and order of dollar amounts do not provide the same level of useful information.

The Assets Section of the Balance Sheet Normally Presents Assets