Arrange the following current assets in of their liquidity.
A. Prepaid expenses
B. Raw Material
C. Debtors
D. Finished goods inventory
E. Bills receivable
Choose the correct answer from the options given below:
Answer & explanation
Correct answer: option 3
The correct answer is option 3- E, C, D, B and A.
Apart from the investment in fixed assets every business organisation needs to invest in current assets. This investment facilitates smooth day-today operations of the business. Current assets are usually more liquid but contribute less to the profits than fixed assets. Examples of current assets, in order of their liquidity, are as under:
1. Cash in hand/Cash at Bank
2. Marketable securities
3. Bills receivable
4. Debtors
5. Finished goods inventory
6. Work in progress
7. Raw materials
8. Prepaid expense