Q.What is meant by 'marshalling' of a Balance Sheet? Explain the two orders in which it can be prepared.

A Balance Sheet's figures mean little if listed at random — marshalling gives them a consistent, readable sequence.

Marshalling means arranging the assets and liabilities of a Balance Sheet in a particular, logical sequence rather than listing them in random order, so that a reader can interpret the statement easily and consistently.

1. Order of Liquidity. Assets are arranged starting from the most liquid (Cash in Hand, Cash at Bank) down to the least liquid (Land and Building); liabilities are arranged starting from those payable soonest (Bank Overdraft, Creditors, Bills Payable) down to those payable last (Capital). This is the order generally followed by sole traders and partnership firms, and the one this syllabus mainly uses. …

Mixing the two orders within the same Balance Sheet (e.g., starting assets with Cash but ending liabilities with Creditors instead of Capital); ass …