Question

Which of the following lists the accounts in order of liquidity?

1) Assets, Liabilities, Equity
2) Equity, Liabilities, Assets
3) Liabilities, Assets, Equity
4) Assets, Equity, Liabilities

Answer 1

The correct order of accounts in terms of liquidity is Assets, Equity, Liabilities.

Step-by-step explanation:

The correct answer is option 4) Assets, Equity, Liabilities.

Liquidity refers to how quickly an asset can be converted into cash without loss of value.

In this case, assets are the most liquid because they can be readily converted into cash. Equity represents the ownership interest in a business and is usually less liquid than assets. Liabilities are the amounts that a business owes to others and are the least liquid.