Current assets may be listed in the balance sheet in the order of their liquidity. Liquidity is:
A) another name for the operating cycle.
B) a measure of how many buyers there are for the asset.
C) whether the asset is secured over a liability.
D) the average length of time it takes to convert an asset into cash.

Question

Quizplus · Accepted Answer

Liquidity refers to the ease with which an asset can be converted into cash. Therefore, current assets may be listed in order of their liquidity, with the most liquid assets listed first. This means that the assets that can be converted into cash most quickly are listed first, followed by assets that may take longer to turn into cash.

Current Assets May Be Listed in the Balance Sheet in the Order