Which one of the following statements concerning liquidity is correct?
A) If you can sell an asset in 18 months, it is a liquid asset.
B) If you can sell an asset next year at a price equal to its actual value, the asset is highly liquid.
C) Trademarks and patents are highly liquid.
D) The less liquidity a ﬁrm has, the lower the probability the ﬁrm will encounter ﬁnancial diﬃculties.
E) Statement of ﬁnancial position accounts are listed in order of decreasing liquidity.

Question

Quizplus · Accepted Answer

Statement of financial position accounts are listed in order of decreasing liquidity, with cash and cash equivalents listed first, followed by short-term investments, accounts receivable, inventory, and property, plant, and equipment. This helps investors and analysts assess a company's ability to meet its short-term obligations. None of the other statements regarding liquidity are correct.

Which One of the Following Statements Concerning Liquidity Is Correct