An Asset Is Considered Liquid If It

question 17

Multiple Choice

An asset is considered liquid if it:

• A) is indexed to the rate of inflation.
• B) acts as a medium of exchange.
• C) can be exchanged for money at little cost.
• D) can be used as a store of value.
• E) has a guaranteed rate of return.

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Definitions:

Gross Method

An accounting method for recording purchases at the gross invoice amount before any trade discounts are deducted.

Sales Discounts

A reduction offered by a seller on the list price of a product or service as an incentive for buyers, usually applied to promote sales, clear out inventory, or recognize volume purchases.

General Journal

A primary accounting record used to keep track of all business transactions not recorded in specialized journals, using the double-entry accounting method.

Periodic Inventory System

An inventory system that updates inventory balances at specific intervals instead of continuously, often requiring a physical count.