Asked by Haley Ochocinski on Jun 15, 2024
Verified
Which of the following statements is true?
A) Current liabilities are generally presented on the statement of financial position in order of liquidity, but IFRS allows presentation in reverse order of liquidity as well.
B) Current liabilities are listed in order of descending dollar value.
C) All companies are prohibited to report current liabilities in reverse order of liquidity.
D) Current liabilities are listed in order of ascending dollar value.
Current Liabilities
Financial responsibilities that must be settled within a year or during the standard operational cycle.
Statement of Financial Position
Another term for the balance sheet, detailing a company's assets, liabilities, and shareholders' equity at a specific point in time.
Liquidity
A measure of how easily assets can be converted into cash without affecting their market price.
- Describe the concepts of solvency and liquidity ratios, and their roles in assessing a company's financial health.
Verified Answer
SW
sumit wadhawanJun 18, 2024
Final Answer :
A
Explanation :
Current liabilities are typically presented on the statement of financial position in order of liquidity. However, IFRS does permit the presentation in reverse order of liquidity, offering flexibility in how financial statements are organized.
Learning Objectives
- Describe the concepts of solvency and liquidity ratios, and their roles in assessing a company's financial health.