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A list of financial statement items for Sunland Company includes the following: accounts receivable $27,300; prepaid insurance $5,070; cash $20,280; supplies $7,410; and debt investments (short-term) $15,990. Prepare the current assets section of the balance sheet listing the items in the proper sequence. (List current assets in order of liquidity.)

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Answer:

Sunland Company's current assets section in order of liquidity:

Cash - $20,280

Short-term Debt Investments - $15,990

Accounts Receivable - $27,300

Inventory (Supplies) - $7,410

Prepaid Insurance - $5,070

Explanation:

This order of liquidity of presenting assets in the balance sheet shows the amount of time it would take to convert the assets into cash.  Cash is regarded as the most liquid current asset because it can be turned quickly into any other class of assets.

Cash is closely followed by marketable security investments, accounts receivable, inventory or supplies, and then expenses prepaid.

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