A Liquid Asset Is Defined as an Asset Which

question 296

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:

Variable Costs

Costs that vary directly with the level of production or volume of output, such as raw materials and labor directly involved in manufacturing.

Activity Levels

A measure used in cost accounting to evaluate the relation between the cost of a particular activity and the level of activity executed.

Operating Leverage

A measure of how revenue growth translates into growth in operating income, determined by the proportion of fixed versus variable costs a company has.

Contribution Margin

The difference between sales revenue and variable costs, indicating how much contributes towards covering fixed costs and generating profit.