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The order of liquidating current assets is:

(A) Prepaid Expenses

(B) Finished goods inventory

(C) Raw Material

(D) Cash at Bank

Choose the correct answer from the options given below:

Solution

✅ Correct Option: 4

Liquidation follows the order of liquidity, from most liquid to least liquid. Cash at bank is the most liquid, followed by finished goods inventory which can be sold readily, then raw material which must first be processed, and finally prepaid expenses which cannot be converted into cash at all. Hence (D), (B), (C), (A).

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