Question : Which of the following is correct for the Liquid Assets :
(A) Current Assets – Prepaid Expense.
(B) Current Assets – Inventory – Prepaid Expense.
Option 1: Option A Correct
Option 2: Option B Correct
Option 3: Both are correct
Option 4: None of the above
Answer (1)
24th Jan, 2024
Correct Answer: Option B Correct
Solution :
Liquid asset = Current Assets – Inventory – Prepaid Expense
Assets that are readily convertible into cash include cash on hand, accounts receivable, different debtors, and short-term investments. Prepaid expenses and inventories are not included, though.
Hence option 2 is the correct answer.
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