Among the Assets Listed Below, Which One Is Considered the Most

question 169

Multiple Choice

Among the assets listed below, which one is considered the most liquid?

• A) Cash
• B) Accounts receivable
• C) Merchandise inventory
• D) Prepaid expenses

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Definitions:

Traceable Fixed Expenses

Fixed costs that can be directly linked to a specific business segment, product, or operation and would disappear if the segment was discontinued.

Common Fixed Expenses

Fixed costs that are not directly attributable to a specific product or service line and must be paid regardless of the level of production or sales.

Contribution Margin

The amount remaining from sales revenue after variable costs have been deducted, indicating how much revenue contributes to covering fixed costs.

Variable Selling Expense

Expenses that fluctuate in direct proportion to sales volume, including commissions and freight fees.