Liquidity Is

question 67

Multiple Choice

Liquidity is:

• A)how quickly loans can be paid.
• B)how easily an asset can be converted to cash.
• C)how much cash a company has on its balance sheet.
• D)how quickly customers pay.

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Definitions:

Aggressive Revenue Recognition

A practice where revenue is recognized before it meets the criteria for recognition, often inflating financial performance.

Liberal Return Policy

A company policy that allows customers to return purchased items with minimal restrictions, aiming to enhance customer satisfaction and trust.

Recognizes Revenue

The process of recording revenue in the financial statements when it is earned and realizable.

Factoring Arrangement With Recourse

A financial transaction where a business sells its receivables to a third party (factor) but must buy back any uncollected receivables, thus bearing the risk of default.