Question

In _______, approach assets which are to be used for long term in the business and are not meant to be sold are presented first and assets which are most liquid such as cash in hand, are presented at the bottom.

• A. Alphabetical order
• B. Permanence order
• C. Liquidity order
• D. None of the above

Answer 1

Answer: (B)

Permanence order

There are two orders followed in Marshalling of assets and liabilities:

1. Order of Liquidity
2. Order of Permanence.

In order of permanence assets and liabilities are shown in the order of how permanent they are. The asset with the highest permanence is placed first and the asset with least permanence is placed last. Liabilities also with higher permanence are placed first and the liabilities with lesser permanence are placed last.