In the List of Assets Below, Which Is the Most

question 250

Multiple Choice

In the list of assets below, which is the most liquid?

• A) $500 worth of Ford Motors common stock
• B) $500 worth of Ford Motors bonds
• C) a $500 traveler's check
• D) a one-ounce gold coin

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Definitions:

Cash Basis

An accounting method where revenues and expenses are recorded when they are actually received or paid, not when they are incurred.

Operating Activities

The day-to-day functions of a business related to producing and selling its products or services, which are reflected in the cash flow statement.

Investing Activities

Transactions involving the purchase and sale of long-term assets and other investments, reflected in the cash flows of a business.

Direct Method

An accounting method used to allocate service department costs directly to producing departments without considering services rendered between service departments.