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Accounting For Managers - Preparation of Final Accounts

Listing Of Items On The Balance Sheet

   Posted On :  26.01.2018 05:18 am

Assets in balance sheet are generally listed in two ways

 i) in the order of liquidity or according to time i.e. In the order of the degree of ease with which they can be converted into cash or ii) in the order of permanence or according to purpose i.e., in the order of the desire to keep them in use. Some assets cannot be easily classified. For e.g. Investments can be easily sold but the desire may be to keep them. Investments may therefore be both liquid and semi-permanent that is why they are shown as a separate item in the balance sheet. Liabilities can also be grouped in two ways; either in the order of urgency of payment or in the reverse order. The various assets and liabilities grouped in the two orders will appear as follows:

Whatever is the order, it is always better to follow the same order for both assets and liabilities. In the illustration `a’ the order of liquidity has been followed.

Tags : Accounting For Managers - Preparation of Final Accounts
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