What does liquidity mean for accounting purposes? In what order should assets be listed on the...

What does liquidity mean for accounting purposes?

In what order should assets be listed on the balance sheet?

Can an account that is not listed in the chart of accounts be used to prepare journal entries? Why or why not?

What does posting to the general ledger mean?

What is the purpose of the trial balance?

Solutions

Expert Solution

What does liquidity mean for accounting purposes?

Liquidity means that the liquid asset that pays the expense in a company but in accounting liquidity means that the ability of the debtor to pay the debt when they fall due.

In what order should assets be listed on the balance sheet?

ASSET

non-current asset

Fixed asset
- Tangible asset
- Intangible asset
Non - current investment
The long term loan and advance

2. current assets

Current investment
Inventories
Trade Receivables
Cash and cash equivalents
Short term loans and advances
Other current assets

Can an account that is not listed in the chart of accounts be used to prepare journal entries? Why or why not?

Yes, the journal entries are prepared with the transactions done in the business it is not based on any of the charts. So it's not important to be in a chart.

What does posting to the general ledger mean?

Posting to ledger means that after the transactions are turned into a journal entries to analyze the credits and debits appearing in journal entries, and post those transaction amounts in the correct accounts thus ledger is prepared.

What is the purpose of the trial balance?

Thus from the word itself its a trial balance in which to measure both debit and credit balance is equal so that to ensure that all the posting are correct if, not equal there is any mistake in any of the entries.

ekkarill92 answered 4 months ago

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