In a classified balance sheet, how are assets typically listed and presented?

• A. In descending order of original cost, beginning with property, plant and equipment and ending with cash.
• B. In order of liquidity, beginning with current assets and then noncurrent assets (such as long-term investments, property, plant and equipment, and intangible assets).
• C. In order of maturity, beginning with current liabilities and then long-term liabilities.
• D. In alphabetical order by account title, regardless of liquidity or classification.

Answer: (B)

Verified step by step guidance

1. Understand that a classified balance sheet organizes assets into categories based on their liquidity, which means how quickly they can be converted into cash.
2. Identify that current assets are listed first because they are the most liquid, including items like cash, accounts receivable, and inventory.
3. Next, noncurrent assets are presented, which include long-term investments, property, plant and equipment (PPE), and intangible assets; these are less liquid and used over a longer period.
4. Recognize that within each category, assets are typically listed in order of liquidity, not by original cost or alphabetically.
5. Therefore, the correct presentation on a classified balance sheet is to list assets starting with current assets followed by noncurrent assets, reflecting their liquidity.