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Current assets and current liabilities are listed on the balance sheet based on ? the length...

Current assets and current liabilities are listed on the balance sheet based on ?

the length of the duration of the asset / liability flows

alphabetical order

importance to the firm

liquidity

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Answer #1

Current assets and current liabilities are listed on the balance sheet based on the Liquidity.

The current assets are recorded in the order of liquidity i.e. the asset which takes less time to be converted into cash are written first and thereby they are highly liquid assets and after that the assets which take little time to be converted into cash are written after this.

The current liabilities are recorded in the order of liquidity i.e. which liability has the highly liquid nature and is to be paid firstly is written at top in the balance sheet.

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