CSEET · Fundamentals of Accounting · Preparation of Final Accounts for Sole Proprietorship
Arranging assets and liabilities in the balance sheet in the order of their permanency, starting with the most permanent, is known as:
This is marshalling in the order of permanence. Assets and liabilities are arranged starting with the most permanent items, such as goodwill and land, and ending with the least permanent, such as cash. The reverse arrangement is called the order of liquidity.
- AMarshalling in order of liquidity
- BMarshalling in order of permanenceCorrect
- CGrouping by nature of accounts
- DValuation by realisable value
Explanation
Marshalling is the orderly arrangement of assets and liabilities. When fixed assets such as goodwill and land are shown first and cash last, it is the order of permanence. The opposite arrangement, cash first, is the order of liquidity.
Did you get it right without looking?
One question tells you little. A timed set on Preparation of Final Accounts for Sole Proprietorship shows your real accuracy, how long you take and where you lose marks.
More Preparation of Final Accounts for Sole Proprietorship questions
- Which statement correctly identifies the purpose of the Trading Account in the final accounts of a sole proprietor?
- Rent paid during the year ended 31 March 2025 was ₹48,000, which includes ₹6,000 paid in advance for April 2025. In the Profit and Loss Acco…
- In the balance sheet of a sole proprietor prepared in the conventional (account) form, where is the closing capital normally shown?
- Meera's capital at the start of the year was Rs 5,00,000. During the year she earned a net profit of Rs 1,20,000, withdrew Rs 30,000 for per…
- Which of the following is the correct treatment of 'income received in advance' in the final accounts of a sole proprietor?
- Salaries paid during the year were ₹1,20,000. The opening outstanding salaries were ₹10,000 and the closing outstanding salaries are ₹15,000…