When an Investment Is Readily Convertible to Cash and the Investor

question 25

Multiple Choice

When an investment is readily convertible to cash and the investor plans to convert the investment to cash within one year,the investment is reported on the balance sheet as:

• A)a current asset.
• B)a long-term asset.
• C)stockholders' equity.
• D)a cash equivalent.

---

Definitions:

Sole Proprietorship

A form of business ownership where a single individual owns and runs the business, bearing full responsibility for its assets and liabilities.

Legal Structure

The framework within which an organization operates, defined by the law, including entities like corporations, partnerships, and sole proprietorships.

Trade Alliance

An agreement between two or more parties, often countries or companies, to foster trade and economic cooperation.

Venture Capitalists

Investors who provide capital to startup companies and small businesses with perceived long-term growth potential in exchange for equity.