The primary basis for classifying assets and liabilities in the balance sheet is:
A) age.
B) profitability.
C) liquidity.
D) cost.

Question

Quizplus · Accepted Answer

The primary basis for classifying assets and liabilities in the balance sheet is liquidity, which refers to an entity's ability to meet its obligations as they come due. Assets and liabilities are classified as current (liquidity within one year) or non-current (liquidity over one year). Age, profitability, and cost are not the primary basis for classification in the balance sheet.

The Primary Basis for Classifying Assets and Liabilities in the Balance