A Liquid Asset Is Defined as an Asset Which

question 358

Multiple Choice

A liquid asset is defined as an asset which:

• A) Has a physical presence and can be touched.
• B) Can be quickly converted into cash without significant loss in value.
• C) A firm expects to own for a period of ten years or more.
• D) Has no physical presence, such as a patent.
• E) A firm purchased with cash within the last year.

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Definitions:

Balance Sheet

A financial statement that summarizes a company's assets, liabilities, and shareholders' equity at a specific point in time.

Direct Method

One of two methods of preparing the net cash flow from operating activities section of the statement of cash flows. Each of the major areas of sources and uses of cash for operations is detailed separately.

Indirect Method

One of two methods of preparing the net cash flow from the operating activities section of the statement of cash flows. Involves converting the accrual basis net income figure from the income statement to the net cash flows from operating activities.

Operating Activities

Those activities most closely related to conducting the business for which the enterprise was established. Activities such as selling merchandise and services to customers and paying salaries and other expenses needed to continue earning the operating revenue are classified as operating activities.