Which one of the following transactions will increase the liquidity of a firm?
A)Cash purchase of new production equipment
B)Payment of an account payable
C)Cash purchase of inventory
D)Credit sale of inventory at cost
E)Cash payment of employee wages

Question

Quizplus · Accepted Answer

A credit sale of inventory at cost increases liquidity because it converts inventory into accounts receivable, which is more liquid than inventory.

Which One of the Following Transactions Will Increase the Liquidity