Practice question · Put in order
Order balance-sheet items from most liquid to least liquid.
- Land
- Inventory
- Equipment
- Cash
- Accounts receivable (30 days)
Hints
- Liquidity means how quickly the item turns into money.
- Property is the slowest to convert.
Show the answer
- Cash
- Accounts receivable (30 days)
- Inventory
- Equipment
- Land
Why
Cash is already liquid; receivables convert in weeks; inventory must be sold; equipment must be sold second-hand; land is the slowest to liquidate. Balance sheets list current assets in this order.
Practise The Balance Sheet
The app has 6 more questions on this lesson, and keeps your place in the course. Business I is free to start.
More questions on The Balance Sheet
- A firm with negative net working capital is always insolvent.
- Current or non-current? Classify each item.
- Match each balance-sheet ratio to what it measures.
- A supermarket chain runs with negative working capital year after year and is perfectly healthy. How?
- A company has current assets 80 and current liabilities 110. What does this tell us?
- Which items belong in the equity section of the balance sheet?