Marshalling of Balance Sheet Video Lecture | SSC CGL Tier 2 - Study Material, Online Tests, Previous Year

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FAQs on Marshalling of Balance Sheet Video Lecture - SSC CGL Tier 2 - Study Material, Online Tests, Previous Year

1. What is marshalling of a balance sheet?
Ans. Marshalling of a balance sheet refers to the rearrangement of the assets and liabilities in a specific order to present a clear and logical picture of a company's financial position. This rearrangement is done by placing the assets in order of their liquidity and the liabilities in order of their maturity.
2. Why is marshalling of a balance sheet important?
Ans. Marshalling of a balance sheet is important because it allows users to easily analyze and interpret the financial position of a company. By presenting assets and liabilities in a logical order, it helps in identifying the company's liquidity position and its ability to meet short-term obligations.
3. What is the order of marshalling assets in a balance sheet?
Ans. The order of marshalling assets in a balance sheet is typically from the most liquid to the least liquid. It starts with cash and cash equivalents, followed by short-term investments, accounts receivable, inventories, and finally, long-term assets such as property, plant, and equipment.
4. How are liabilities marshalled in a balance sheet?
Ans. Liabilities in a balance sheet are marshalled in the order of their maturity. Short-term liabilities, such as accounts payable and accrued expenses, are listed first, followed by long-term liabilities, such as bonds and loans. Shareholders' equity is usually placed at the bottom of the balance sheet.
5. Can the marshalling order of assets and liabilities vary in different industries?
Ans. Yes, the marshalling order of assets and liabilities can vary in different industries based on their specific characteristics. For example, in industries with high inventory turnover, inventories may be placed higher in the order of assets. Similarly, industries with significant long-term debt may prioritize the marshalling of long-term liabilities. However, the general principle of liquidity and maturity remains the guiding factor.
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