What Is a Liquid Asset and Why Is It Necessary

question 28

Essay

What is a liquid asset and why is it necessary for a firm to maintain a reasonable level of liquid assets?

Apply knowledge of job order costing and process costing systems to different business scenarios.

Understand the usage and importance of cost of production reports in manufacturing operations.

Identify factors affecting operational efficiency and their measurement through various metrics.

Identify and differentiate between job order costing and process costing systems.

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Definitions:

Stock Options

Contracts that grant the holder the right, but not the obligation, to buy or sell a stock at a predetermined price within a specific time frame.

Available-for-Sale

Available-for-sale refers to financial assets that are not classified as held-for-trading or held-to-maturity, and are recorded at fair value with changes recognized in other comprehensive income.

Market Values

The current price at which an asset or service can be bought or sold in a competitive marketplace.

Unrealized Increase/Decrease

Refers to the change in value of an investment that has not been sold, affecting the company’s balance sheet but not its income statement.