What is the Order of Liquidity?
AccountancyClass 11CBSEAnswered 23 Jun 2026
Answer
Liquidity means the facility with which the assets may be converted into cash; those assets which are most difficult to convert into cash are written last. Liabilities are to be shown first as short-term liabilities and then as long-term liabilities and last of all capital.
In the order of liquidity
| Liabilities | Assets |
| Bills Payable Sundry Creditors Bank Overdraft Loans Capital Opening Balance Add: Net Profit Less: Drawing | Cash in hand Cash at bank Bills Receivable Debtors Closing Stock Investment Furniture Plant and Machinery Land and Buildings Goodwill |
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