Question

Choose the correct option regarding the arrangement of current assets in order of

liquidity from highest to lowest

(a) Marketable securities, cash, debtors, bills receivables

(b) Prepaid expenses, cash, marketable securities, bills receivables

(c) Bills receivables, cash, marketable securities, debtors

(d) Cash, marketable securities, bills receivables, debtors​

Answer 1

Cash, marketable securities, bills receivables, and debtors are the current assets in the order of liquidity from highest to lowest. (d)

• Liquid assets are those assets that can be quickly and easily converted into cash. It will not lead to any loss in its value. Thus, cash is the most liquid asset.
• Marketable securities come next in the order as the securities can be sold in the market and can be liquidated. In the same way, the bills receivable and debtors can also pay off the money due from them.
• There are various degrees of liquidity. Bills receivable can be converted in a short period. However, property plans or equipment, land, and buildings are not liquid assets as they do not possess liquidity,

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Answer 2

Answer:

Cash, marketable securities, bills receivables, debtors

Explanation:

●As cash is most liquid it will be first

●After then marketable securities can be sold at any time any where.

●Bill receivables give us money as on time as for contract made at predecided time

●Debtors may give all money but there is also chances of bad debt