Which of the following is more indicative of a business's financial strength?
A) Short-term investments
B) Prepaid expenses
C) Accounts payable
D) Inventories

Question

Quizplus · Accepted Answer

Short-term investments typically indicate that a business has excess funds that it can invest, which is a sign of financial strength. Prepaid expenses indicate that a business has paid for expenses in advance, but does not necessarily reflect financial strength. Accounts payable reflects the amount of money a business owes to its vendors or suppliers, which is not necessarily indicative of financial strength. Inventories reflect the amount of goods a business holds for sale, which does not necessarily reflect financial strength unless the inventory turnover rate is high.

Which of the Following Is More Indicative of a Business's