Arrangement of Assets and Liabilities.

Grouping and Marshalling or Arrangement of Assets and Liabilities. 

The assets and liabilities should be shown in a certain order in the Balance Sheet. Therefore, they should be arranged in certain groups and in a particular order. This is called ‘Grouping’ and ‘Marshalling’ of the Balance Sheet. Thus, ‘Grouping’ means putting together items of similar nature under a common heading.

Marshalling of Balance Sheet means the order in which the assets and liabilities are arranged and shown in the Balance Sheet: Assets and liabilities can be arranged in the Balance Sheet into two ways :

  1. In order of liquidity.
  2. In order of permanence.

In order of liquidity: In such a case, the assets are arranged in the order of their liquidity, i.e., the most liquid asset, is shown first. The least liquid asset (e.g., goodwill) is shown last. The liabilities are arranged in the order in which they are to be discharged. A simple format of the Balance Sheet in the order of liquidity is as follow :


In order of Permanence: This order is reverse of the liquidity order. The least liquid asset is shown first and the most liquid asset is shown last. Similarly, in the case of liabilities. Capital is shown first, then long term liabilities and last of all short term liabilities are shown. A simple format of the Balance Sheet in the Order of permanence is shown below:


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