Question

Following is the list of current assets:
(I) Stock-in-trade

(II) Cash in hand
(III) Bills Receivable

(IV) Debtors
(V) Investments

(VI) Accrued Interest
(VII) Advertisement prepaid

(VIII) Cash at bank
What is correct sequence in order of liquidity?

• A. II, VIII, V, IV, III, I, VI, VII
• B. I, II, III, IV, V, VI, VII, VIII
• C. II, VIII, IV, V, I, III, VI, VII
• D. IV, III, II, I, VIII, VII, VI, V

Answer 1

Answer: (A)

II, VIII, V, IV, III, I, VI, VII

Current Assets are those which arises during the course of business. These are fluctuating and changes with each business transactions.

Current Assets are represented in the balance sheet in the order of liquidity or permanency. in case of order of liquidity, the assets which are more liquid are to be shown first.

Following is the correct order of liquidity:

II- Cash On Hand

VIII- Cash at Bank

V- Investments

IV- Debtors

III- Bills Receivables

I- Stock in Trade

VI- Accrued Interest

VII- Advertisement Prepaid