The Liquidity of an Asset Is Determined by

question 50

Multiple Choice

The liquidity of an asset is determined by

• A)the central bank
• B)the cost of keeping it in a safe place
• C)its potential value to the buyer
• D)the cost, convenience, and speed with which it can be converted into money
• E)how frequently it turns over in trade during the year

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Definitions:

Accounts Receivable

Amounts due from clients to a business for received goods or services that remain unpaid.

Inventory

The total amount of goods and materials held by a company for the purpose of resale or production.

Accounts Payable

Liabilities or amounts owed by a business to suppliers or creditors for goods and services received but not yet paid for.

Independent Audit

An evaluation performed by an external entity to examine the accuracy and fairness of a company's financial statements.