Assets presented on the statement of ﬁnancial position are in order of accounting liquidity. Accounting liquidity refers to:
A)how much inventory a brewer keeps.
B)a ﬁrm's ability to sell its product.
C)the risk of receiving payment on their accounts.
D)ability and time it takes to convert assets to cash.
E)None of the above.

Question

Quizplus · Accepted Answer

Accounting liquidity refers to the ability and time it takes to convert assets to cash. Hence, the assets presented on the statement of financial position are ordered by how quickly they can be converted to cash, starting with the most liquid assets.

Assets Presented on the Statement of ﬁNancial Position Are in Order