The main advantages of marshalling are as follows:
It shows the relationship between the capital and fixed assets and the amount of working capital, if any, provided by proprietor.
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ADVERTISEMENTS:
Marshalling expresses the relationship between current assets and current liabilities. The modern practice is to avoid general heading of ‘Assets’ and ‘Liabilities’ but to arrange assets and liabilities in groups under appropriate heading with sub-totals to show the amount of (1) Fixed Assets (2) Current Assets (3) Fictitious assets on the assets side and (1) Proprietors equity (2) Long term liabilities and Current liabilities on the liabilities side. (3) The arrangement of assets and liabilities facilitates a comparison between different groups of assets and liabilities.