Question

Identify the correct order of showing the following current assets in the Balance Sheet of a company:
(A) Other current assets
(B) Inventories
(C) Current Investments
(D) Trade receivables
(E) Cash and Cash Equivalents
Choose the correct answer from the options given below:

• A. (A), (B), (C), (D), (E)
• B. (B), (C), (D), (E), (A)
• C. (C), (B), (D), (E), (A)
• D. (D), (E), (A), (B), (C)

Answer 1

The Correct Option is B

Current assets on the Balance Sheet are typically arranged by their liquidity. The standard order is: 1. Inventories (B): Goods ready for sale with rapid conversion to cash. 2. Current Investments (C): Investments readily convertible to cash. 3. Trade Receivables (D): Customer debts for provided goods or services. 4. Cash and Cash Equivalents (E): On-hand cash and short-term liquid investments. 5. Other Current Assets (A): Various current assets not fitting other classifications.
Therefore, the correct order for presenting current assets on the Balance Sheet is (B), (C), (D), (E), (A).