Question

Receivables are assets that must be reported in the order of ______?

1) Time
2) Cash Equivalents
3) Liquidity
4) Interest Rates

Answer 1

Receivables are reported in the order of liquidity, which refers to how quickly an asset can be converted into cash. Short-term receivables are reported first, followed by cash equivalents, and then long-term receivables.

Step-by-step explanation:

The order in which receivables are reported depends on their liquidity. Liquidity refers to how quickly an asset can be converted into cash without causing significant price changes.

Receivables that are expected to be converted into cash within a short period of time, typically less than a year, are reported first. This includes accounts receivable from customers and short-term loans receivable.

Cash equivalents, such as highly liquid investments that can be easily converted into cash, are reported next. These include treasury bills and commercial paper.

Lastly, long-term receivables with longer repayment periods, such as long-term loans receivable, are reported.