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.
Option 1: Option A
Option 2: Option B
Option 3: Both of the above
Option 4: None of the above
Correct Answer: Option B
Solution :
The word "liquid assets" refers to assets that can be quickly converted into cash, such as cash on hand, accounts receivable, various debtors, and short-term investments. However, it excludes inventories and pre-paid expenses.
The cash balance, bills receivable, various debtors, short-term investments, as well as prepaid expenses and inventories, were all included in the list of current assets.
Option 2 is the correct answer.
