Liquidity Is a Measure of How ________

question 26

Multiple Choice

Liquidity is a measure of how ________.

• A)quickly an asset may be converted into cash
• B)long an asset can be used
• C)easily an asset can be exchanged for another asset
• D)short an operating cycle is

---

Definitions:

Balance Sheet

A financial statement that presents a company's assets, liabilities, and shareholders' equity at a specific point in time, offering insight into its financial position.

Fair Value

The estimated market value of an asset or liability, based on current prices in an open market.

Measurement Alternative

An accounting option that allows entities to measure certain assets or liabilities at a cost that may differ from fair value, often under specific circumstances.

Cash Equivalent

Short-term, highly liquid investments that are readily convertible to known amounts of cash and have original maturities of three months or less.