Question

On a partner's personal statement of financial condition, assets and liabilities are presented: I. As current and noncurrent. II. In order of liquidity and maturity. Which of the following statements is correct?

1) Only statement I is correct.
2) Only statement II is correct.
3) Both statements I and II are correct.
4) Neither statement I nor II is correct.

Answer 1

On a partner's personal statement of financial condition, assets and liabilities are typically presented in order of liquidity and maturity.

Step-by-step explanation:

On a partner's personal statement of financial condition, assets and liabilities are typically presented in order of liquidity and maturity. This means that current assets and liabilities, which are expected to be converted into cash or settled within one year, are listed before noncurrent assets and liabilities, which are expected to be converted into cash or settled after one year.

For example, current assets could include cash, accounts receivable, and inventory, while current liabilities could include accounts payable and short-term debt. Noncurrent assets could include long-term investments and property, plant, and equipment, while noncurrent liabilities could include long-term debt and deferred taxes.

Therefore, statement II, which states that assets and liabilities are presented in order of liquidity and maturity, is correct. Statement I, which suggests that assets and liabilities are presented as current and noncurrent, is not necessarily true as assets and liabilities can be presented in other ways.