An asset is considered to be liquid if:
A)it is readily converted into a fixed asset.
B)it is an intangible asset.
C)it is readily converted into cash.
D)it is part of retained earnings.

Question

Quizplus · Accepted Answer

An asset is considered to be liquid if it can be readily converted into cash. This means that the asset can be sold quickly and easily without causing any significant loss in value. Examples of liquid assets include cash, accounts receivable, and marketable securities. Option A is incorrect as fixed assets are non-liquid assets. Option B is incorrect as intangible assets do not have a physical existence and cannot be readily converted into cash. Option D is incorrect as retained earnings are a component of equity and not an asset.

An Asset Is Considered to Be Liquid If