Which of the Following Characteristics Apply to Liquid Assets

question 7

Multiple Choice

Which of the following characteristics apply to liquid assets?

• A)They are characterized by low returns.
• B)They involve low risk.
• C)The temptation to spend is greater.
• D)All of the above are correct.

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Definitions:

Current Ratio

A liquidity ratio that measures a company's ability to pay short-term obligations or those due within one year, calculated as current assets divided by current liabilities.

Current Liabilities

Obligations or debts that a company is expected to pay within one year or within its operating cycle.

Current Assets

Items that are projected to be turned into cash, disposed of, or used up within twelve months or the usual business operational cycle.

Fiscal Year

The one-year period a company or government uses for accounting purposes and preparing financial statements.