Indicate the order that the following current assets should be listed in the balance sheet.
I Accounts receivable
II Cash at Bank
III Prepaid expenses
IV Inventory
A) I, II, III, IV
B) II, III, I, IV
C) II, I, IV, III
D) III, II, I, IV

Question

Quizplus · Accepted Answer

The order of current assets in the balance sheet should generally be in order of liquidity or ease of conversion to cash. Cash at Bank is the most liquid asset and should be listed first. Accounts receivable, which is typically converted into cash within a short period, should be listed next. Inventory is usually less easily converted to cash than accounts receivable; therefore, inventory should be listed after accounts receivable. Prepaid expenses are the least liquid of the four, so they should be listed last. Therefore, the correct order is II, I, IV, III, which is option C.

Indicate the Order That the Following Current Assets Should Be