To facilitate the evaluation of an entity's liquidity assets and liabilities are classified as:
A) tangible and intangible.
B) current and non-current.
C) operating and non-operating.
D) temporary and permanent.

Question

Quizplus · Accepted Answer

Assets and liabilities are classified as current or non-current based on their expected conversion to cash or settlement within one year or beyond one year, respectively. This classification facilitates the evaluation of an entity's liquidity. The other classifications given (tangible/intangible, operating/non-operating, temporary/permanent) do not distinguish between the expected timing of conversion to cash or settlement and are therefore less relevant for assessing liquidity.

To Facilitate the Evaluation of an Entity's Liquidity Assets and Liabilities