With respect to current assets,liquidity refers to:
A)How quickly the asset can be converted to cash.
B)The magnitude of the asset's account balance.
C)Whether cash was paid for the asset at the time of acquisition.

Question

Quizplus · Accepted Answer

Liquidity refers to how quickly an asset can be converted to cash. This means that the asset can be easily sold or redeemed for cash without significantly affecting its value. The magnitude of the asset's account balance (option B) does not necessarily have a direct correlation with liquidity, as a large account balance may represent inventory or accounts receivable that cannot be easily converted to cash. Option C is also not relevant, as whether cash was paid for the asset at the time of acquisition does not necessarily impact its current liquidity.

With Respect to Current Assets,liquidity Refers To