Question : Which of the following is the correct answer" A: Liquid assets can be converted into cash immediately. B: Machinery can be converted easily in cash by selling it.
Option 1: Option A
Option 2: Option B
Option 3: Both of the above
Option 4: None of the above
Correct Answer: Option A
Solution : Cash and cash equivalents, or anything that can be quickly turned into cash without losing value, are considered liquid assets. Hence option 1 is the correct answer.
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
Question : Which of the following statements is incorrect?
Option 1: The quick ratio indicates whether the firm is in a position to pay its current liabilities within a month or immediately.
Option 2: The quick ratio is calculated by dividing liquid assets (Quick Current Assets) by current liabilities.
Option 3: 'Liquid assets' means those assets which will be converted into cash and cash equivalents very shortly.
Question : Which of the following statements is the correct answer? A: Liquid Assets included stock as well as prepaid expenses. B: Current Assets included stock as well as prepaid expenses.
Question : Which of the following is the correct formula for "Current Ratio"?
Option 1: Liquid Assets/Current Liabilities
Option 2: Current Assets/Current Liabilities
Option 3: Fixed Assets/Current Assets
Option 4: Liquid Assets/Current Assets
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