Question

Which one of the following statements concerning the balance sheet is correct?

Assets are listed in descending order of liquidity.

Current assets are equal to total assets minus net working capital.

Net working capital is equal total assets minus total liabilities.

Total assets equal total liabilities minus total equity.

Shareholders' equity is equal to net working capital minus net fixed assets plus long-term debt.

Answer 1

Assets are listed in descending order of liquidity is a correct answer

Current Assets are equal to

= Total Assets - Net Fixed Assets

So option 2 is incorrect

Net working capital is equal to

= Current Assets - Current Liabilities

So option 3 is incorrect

Total Assets is equal to

= Total Liabilities + Equity

So option 4 is incorrect

Shareholder's equity is equal to

= Total Assets - Total Liabilities

So option 5 is incorrect

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