Question

Identify the correct order of showing the following current assets in the Balance Sheet of a company:
(A) Other current assets
(B) Inventories
(C) Current Investments
(D) Trade receivables
(E) Cash and Cash Equivalents
Choose the correct answer from the options given below:

• A. (A), (B), (C), (D), (E)
• B. (B), (C), (D), (E), (A)
• C. (C), (B), (D), (E), (A)
• D. (D), (E), (A), (B), (C)

Answer 1

The Correct Option is B

In the Balance Sheet, current assets are generally presented in the order of their liquidity. The typical order is as follows: 1. Inventories (B): Goods available for sale that can be quickly converted to cash. 2. Current Investments (C): Investments that are easily convertible to cash. 3. Trade Receivables (D): Amounts owed to the company by customers for goods or services provided. 4. Cash and Cash Equivalents (E): Cash on hand and other short-term liquid investments. 5. Other Current Assets (A): Miscellaneous current assets that do not fit into the above categories.
Thus, the correct sequence of showing current assets in the Balance Sheet is (B), (C), (D), (E), (A).