Q 3-4 Usually, current assets are listed in a specific order, starting with cash. What is the objective of this order of listing? Q 3-5 Differentiate between marketable securities and long-term investments. What is the purpose of owning each? Q 3-6 Differentiate between accounts receivable and accounts payable.
Answer :3-4
Current assets are listed in liquidity order that means most liquid assets are placed first. Liquid means assets which can be converted into Cash in a very short time. Cash is the most liquid asset that is the reason it is placed at the first place under current assets.
3-5
Marketable securities are securities which are to be sold within 12 months or a year while long term investment are held for more than a year. Further, marketable securities are shown under current assets and long term investment are shown under non-current assets.
3-6
Accounts receivable means right to receive a certain sum of money from the customers while Accounts payable means an obligation to pay a certain sum of money to the suppliers. Further, Accounts receivable is shown under current assets and Accounts payable is shown under current liabilities.
Get Answers For Free
Most questions answered within 1 hours.