Question

Under liquidity order of balance sheet _________ a/c is shown first.

• A. cash in hand
• B. cash in bank
• C. FD with bank
• D. goodwill

Answer 1

The correct option is A cash in hand

Assets and Liabilities are to be shown in the balance sheet either in permanency order or liquidity order. This is called marshaling of balance sheet.

Liquidity Order- In this order, assets and liabilities are shown as per their liquidity. In such case, cash and bank is the most liquid assets and hence will be shown first. It is just reversed of the permanency order.