Series 79 practice questionmediumBalance Sheet Liquidity
Which of the following items would be considered the MOST liquid asset on a company’s balance sheet?
- AInventory
- BAccounts receivable
- CPrepaid expenses
- DCash and cash equivalents✓ Correct answer
Explanation
Why D — Cash and cash equivalents
Cash and cash equivalents are the most liquid assets—immediately available for transactions. Receivables and inventory may require time to convert to cash; prepaid expenses are not convertible.
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