The concept of a self-liquidating asset implies that

Question

Quizplus · Accepted Answer

A self-liquidating asset is an investment that generates cash flow sufficient to pay back the initial investment within a specific time frame. In this context, it means that all the product will be sold, receivables collected, and bills paid over the time period specified. Therefore, option B is the correct choice. Option A is incorrect because the time period specified is not necessarily one year. Option C is incorrect because it pertains to the depreciation of assets, which is not related to the concept of self-liquidating assets. Option D is incorrect because self-liquidating assets can be financed by short or long-term sources of capital, depending on the nature of the asset and its expected cash flow.

The Concept of a Self-Liquidating Asset Implies That