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Question on liquidity

geek84geek84 Trusted RegularMAAT Posts: 567
Hi folks

I hope you're all fine and enjoying your studies!

Could you be kind enough to help me with this -

How would I answer a question if asked -

Put the following assets/liabilities in order of the ability to turn into liquid? (assuming that a list is given!)

Thanks in advance.

Comments

  • Steve CollingsSteve Collings Experienced Mentor Registered Posts: 997
    This is sometimes termed the 'order of liquidity' - the hardest to turn into cash is at the top whilst the most liquid/cash is at the bottom of the list. It's normally associated with assets.

    Regards

    Steve
  • uknittyuknitty Experienced Mentor Registered Posts: 591
    I would give the following answer. Not saying its the right one though :D

    From Least to most:

    Intangiable Non Current Assets

    Tangiable Non Current Assets

    Inventories

    Accounts Receivable

    Cash and Cash Equivalents
  • MonsoonMonsoon Font Of All Knowledge FMAAT, AAT Licensed Accountant Posts: 4,071
    Uknitty you won't get any arguments from me with that list, but thats my opinion not my actual knowledge!! ;)
  • geek84geek84 Trusted Regular MAAT Posts: 567
    Hi uuknitty

    Many thanks for your reply.

    Can you be kind enough to give examples of tangible and non tangible non current assets?

    Thanks
  • uknittyuknitty Experienced Mentor Registered Posts: 591
    As intangiable asset is something that has value but no physical presence - for example goodwill.

    Tangiable assets are those which are physically real. This includes all property, plant and equipment. Bank accounts are tangiable assets because they represent actual monetary funds.

    Does that make sense ?
  • geek84geek84 Trusted Regular MAAT Posts: 567
    Many thanks uknitty
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