Kim's Copy Shop is in the process of organizing its assets in the appropriate order. The manager asks you for help in arranging the following assets: equipment, accounts receivable, cash, merchandise inventory, and notes receivable. If you list cash first, which of the following will you list last?
A) merchandise inventory
B) note receivable
C) accounts receivable
D) equipment

Question

Quizplus · Accepted Answer

When arranging assets in order, the general rule is to list them in order of liquidity, or how easily they can be converted to cash. Cash is the most liquid asset and should always be listed first. The next most liquid asset is usually accounts receivable, followed by merchandise inventory and notes receivable. Equipment is the least liquid asset because it cannot be easily converted to cash and should be listed last.

Kim's Copy Shop Is in the Process of Organizing Its