The order of liquidity of Current Assets is:
(A) Cash in Hand
(B) Marketable Securities
(C) Bills Receivable
(D) Debtors
Choose the correct answer from the options given below:
Answer & explanation
Correct answer: option 1
The correct answer is Option (1) → (A), (B), (C), (D)
Liquidity means how quickly and easily an asset can be turned into cash without loss.
(A) Cash in Hand — first. Cash is already cash, so it is the most liquid of all.
(B) Marketable Securities — second. These are short-term investments, such as treasury bills, that can be sold in the market at any time and turned into cash almost at once.
(C) Bills Receivable — third. A bill is a written promise by the debtor to pay on a fixed date. It can also be discounted with a bank before that date, so it turns into cash faster than an ordinary debt.
(D) Debtors — fourth. Money owed by customers on open account has no written promise behind it. The firm must wait until the customer pays, so debtors are the least liquid of the four.
NCERT (2026-27 Edition): “Working Capital Apart from the investment in fixed assets every business organisation needs to invest in current assets. This investment facilitates smooth day-to-day 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. |