Question

Based on your understanding of the different items reported in the balance sheet and the information they provide, which statement regarding Cold Goose Metal Works Inc.’s balance sheet is consistent with U.S. Generally Accepted Accounting Principles (GAAP)?A. The company’s debts should be listed in order of their liquidity.
B. The company’s debts are listed in the order in which they are to be repaid.
C. The company’s debts should be listed from those carrying the largest balance to those with the smallest balance.

Answer 1

Answer:

Debts are listed in the order in which they are to be repaid

Explanation:

Balance sheet , according to the U.S Generally Accepted Accounting principles are to be arranged in a way that users can easily have an understanding of what and when is due .

To this effect specific guidelines are provided to guide the presentation of assets , liabilities and equities on the balance sheet.

Company's debts and other liabilities should be listed in the order in which they are to be repaid so that the users or management can easily discover liabilities that are about due for settlement and work towards allocating resources for the payment.

Answer 2

Answer:

which statement regarding Cold Goose Metal Works Inc.’s balance sheet is consistent with U.S. Generally Accepted Accounting Principles (GAAP)

A. The company’s debts should be listed in order of their liquidity.

Explanation:

Under U.S. GAAP, assets are presented in descending order of liquidity, liabilities in ascending order of time to maturity, and equity in descending order of priority in liquidation.