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Arrange the following current assets in order of their liquidity

A. Prepaid expenses

B. Raw Material

C. Debtors

D. Finished goods inventory

E. Bills receivable

Choose the correct answer from the options given below:

Solution

Correct Option: 3

In decreasing order of liquidity: Bills receivable are most liquid as they are negotiable, then Debtors, then Finished goods, then Raw material, and finally Prepaid expenses which cannot be converted to cash. This gives E, C, D, B, A.

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