An entity is required to classify its assets and liabilities as current or non-current unless it is considered more relevant and provide more reliable information to present them according to their:
A) value;
B) liquidity;
C) age;
D) physical nature.

Question

Quizplus · Accepted Answer

Classifying assets and liabilities based on liquidity, i.e., their ability to be converted into cash within a short time, would provide more relevant and reliable information to users of financial statements about the entity's ability to meet its short-term obligations. This is considered a more practical and useful approach than categorizing them based on their value or physical nature.

An Entity Is Required to Classify Its Assets and Liabilities