Marshalling of Balance Sheet

True Tamplin

Written by True Tamplin, BSc, CEPF®
Updated on June 22, 2021


The arrangement of assets and liabilities in balance Sheet is called “Marshalling“.


The main purpose of Balance Sheet is to show the financial position of the business. Therefore, assets and liabilities in Balance Sheet should be shown in such an order which help to understand the financial position easily. To serve this purpose assets and liabilities are recorded in Balance Sheet in a certain order. This order of assets and liabilities in Balance Sheet is called Marshalling.

Methods of Marshalling

1. The Order of Permanence

Under this method, the assets are shown according to their permanency i.e. permanent assets are shown first and less permanent assets are shown afterward. Similarly, the fixed or the long term liabilities are shown first and the current liabilities afterward. The following is the specimen of the balance sheet under this order.
The Order of Permanence Marshalling Methods of Balance Sheet

2. Order of Liquidity

Under this method, the current and fixed assets of the business are entered in the balance sheet in the order of the degree of ease with which they can be converted into cash and the liabilities in the order of urgency of payment. The order of liquidity is generally used by the sole traders and partnership firms. The following is the format of balance sheet under Order of Liquidity Method.
Order of Liquidity Marshalling Method of balance Sheet

3. Mixed Order

Under this order of arrangement, the assets are arranged in the order of liquidity and the liabilities are arranged in the order of permanency. The format of Balance sheet prepared under this method is as below:
Mixed order Method of Mashalling of balance Sheet

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