Which One of the Following Statements Related to Liquidity Is

question 9

Multiple Choice

Which one of the following statements related to liquidity is correct?

• A)Liquid assets tend to earn a high rate of return.
• B)Liquid assets are valuable to a firm.
• C)Liquid assets are defined as assets that can be sold quickly regardless of the price obtained.
• D)Inventory is more liquid than accounts receivable because inventory is tangible.
• E)Any asset that can be sold within the next year is considered liquid.

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Definitions:

Variable Costs

Expenses that fluctuate based on the amount of products or services a company generates.

Net Income

Net Income is the total profit of a company after all expenses and taxes have been deducted from revenue.

Variable Costs

Costs that vary in proportion to the level of production or business activity.

Fixed Costs

Expenses that do not change with the amount of goods or services produced over a short period.