Question

In the current assets section of a​ merchandiser's balance​ sheet, Merchandise Inventory will be listed below Accounts Receivable because Merchandise Inventory is considered less liquid than Accounts Receivable.True or false?

Answer 1

False. Accounts Receivable is listed below Merchandise Inventory in the current assets section of a merchandiser's balance sheet.

Step-by-step explanation:

False. In the current assets section of a merchandiser's balance sheet, Accounts Receivable will be listed below Merchandise Inventory because Accounts Receivable is considered less liquid than Merchandise Inventory.

Accounts Receivable represents the money owed to the merchandiser by its customers for the goods or services that have been sold on credit. It is considered less liquid because the collection of these receivables may take time and there is a risk of non-payment.

On the other hand, Merchandise Inventory represents the goods that the merchandiser has on hand and is ready to sell. It is considered more liquid because these goods can be sold for cash relatively quickly.