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Arrangement of Liabilities

Liabilities can be arranged in two ways:

  • Order of permanence: Under this, liabilities of least urgent payment are shown first and most urgent payment are shown last.
  • Order of liquidity: The liabilities are arranged in the order of their urgency of payment i.e. short term liabilities are presented first and long term liabilities are shown at the bottom.



• A Company should mandatorily adopt permanency order
• Banks and financial institutions generally follow order of liquidity

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