Which of the following statements regarding balance sheet presentation is true?
A)IFRS does not prescribe the ordering of liabilities within current and noncurrent groups.
B)The account format lists liabilities and shareholders' equity directly below the assets.
C)The report format lists liabilities and shareholders' equity on the right side of the statement.
D)GAAP allows assets to be listed in either increasing or decreasing order of liquidity.

Question

Quizplus · Accepted Answer

IFRS does not specifically prescribe the order in which liabilities should be presented within the current and noncurrent categories, which means companies may choose to disclose liabilities in whatever way they consider more appropriate for their particular circumstances.

B is incorrect as the account format lists assets on the left-hand side and liabilities and shareholders' equity on the right-hand side.

C is incorrect as the report format lists assets on the left-hand side and liabilities and shareholders' equity on the right-hand side.

D is incorrect as GAAP requires assets to be listed in order of liquidity, which means from most liquid to least liquid.

Which of the Following Statements Regarding Balance Sheet Presentation Is