Concept explainers
The order in which assets were listed and described in the text is the order in which you will see them listed on the balance sheet. What is the organizing principle behind the order in which assets are listed?
Explain the organizing principle behind the listing of assets on the balance sheet.
Explanation of Solution
Asset:
Assets refer to the resources owned by the business, which are utilized in the course of the business to generate revenue.
The organizing principle behind in the listing of assets on the balance sheet as follows:
At the time of listing of assets on the balance sheet, the assets are prioritized based on the liquidity. The high liquid assets are reported in the beginning of asset section, and then low liquid assets are reported.
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Chapter 2 Solutions
Financial Accounting, Student Value Edition (5th Edition)
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