Question

Arrange the following items in the order of liquidity.
a) Long term loans
b)Bank overdraft
c) Capital
d)Debentures
e)Creditors
f) Bills payable​

Answer 1

Answer:

Assets and liabilities are to be shown in the balance sheet in an order. There are two ways of showing the items of assets & liabilities i.e. Order of permanency and order of liquidity. This is also called as marshaling of balance sheet.

Accordingly , items to be shown as :

Share Capital

Bank Loan

Bank Overdarft

Provision for Taxation.