To assist in evaluating an entity's liquidity, assets and liabilities are classified as:
A) temporary and permanent.
B) tangible and intangible.
C) operating and non-operating.
D) current and non-current.

Question

Quizplus · Accepted Answer

Classifying assets and liabilities as either current or non-current is the most commonly used method to evaluate an entity's liquidity. Current assets and liabilities are those that are expected to be utilized or paid within one year, while non-current assets and liabilities are those that have a longer-term usage or payment timeline. This distinction allows analysts to quickly assess an entity's ability to meet its short-term obligations. Choices A, B, and C are not as relevant in evaluating liquidity.

To Assist in Evaluating an Entity's Liquidity, Assets and Liabilities