The balance sheet may list current assets in their order of liquidity. Liquidity refers to:
A) the entity's operating cycle.
B) how many buyers there are for the asset.
C) whether the asset is held as security over a liability.
D) the average length of time it takes to convert an asset into cash.

Question

Quizplus · Accepted Answer

Liquidity refers to the ability of an asset to be converted into cash quickly without a significant loss in value. Current assets are listed in order of liquidity on the balance sheet, with those that can be converted into cash most easily listed first. This order provides important information about an entity's ability to cover short-term obligations and manage its working capital efficiently.

The Balance Sheet May List Current Assets in Their Order