All of the following treatments for the presentation of curr

All of the following treatments for the presentation of current liabilities are acceptable except A : showing current liabilities immediately below current assets to obtain a presentation of working capital. B : listing current liabilities according to amount. C : listing current liabilities in order of maturity. D : offsetting current liabilities against assets that are to be applied to their liquidation.

Solution

D. Offsetting current liabilities against assets that are to be applied to their liquidation

Offsetting current liabilities against assets that are to be applied to their liquidation is not acceptable since liquidation is a rare event. It may or may not happen. Current liabilities are the ones that are to be paid off in a span of one year. While assets to be applied against liquidation may be short as well as long term. Setting off current liabilities against such assets would not present a real picture of the financial statements.