Which One of the Following Statements Concerning Liquidity Is Correct

question 297

Multiple Choice

Which one of the following statements concerning liquidity is correct?

• A) If you can sell an asset in 18 months, it is a liquid asset.
• B) If you can sell an asset next year at a price equal to its actual value, the asset is highly liquid.
• C) Trademarks and patents are highly liquid.
• D) The less liquidity a firm has, the lower the probability the firm will encounter financial difficulties.
• E) Statement of financial position accounts are listed in order of decreasing liquidity.

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Definitions:

Scrap Disposal

The process of getting rid of waste materials, remnants, or byproducts from manufacturing or consumption.

Primary Metals

The unalloyed, pure forms of metals extracted directly from the earth through mining processes, which serve as the basic raw materials for metal production and manufacturing.

Price Fluctuation

Variability in the prices of goods and services over time due to factors like supply and demand dynamics, market conditions, and external economic influences.

Scrap Material

Waste or refuse materials generated during manufacturing or consumption processes, often recyclable or reusable in other forms.