alleryStart learning →In what order are assets listed on a balance sheet?
AIn order of their purchase date
BIn order of their useful life
CIn order of their book value
DIn order of their liquidity
Answer & Solution
Correct answer: D. In order of their liquidity
1. Assets are listed in order of their liquidity, meaning the speed with which they can be converted to cash.
2. The most liquid come first, so cash heads the list, and the least liquid come last.
3. Buildings have to be sold before they become cash, so they sit well below cash.
4. Liabilities follow the same logic, with those due in the short term listed before those due in the long term.
_Source: OpenStax Introduction to Business (CC BY 4.0), Ch 14 "Using Financial Information and Accounting", section 14.4 The Balance Sheet_
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