Table of contents

1. Introduction to Accounting1h 21m
2. Transaction Analysis1h 13m
3. Accrual Accounting Concepts2h 38m
4. Merchandising Operations2h 30m
5. Inventory1h 55m
6. Internal Controls and Reporting Cash1h 16m
7. Receivables and Investments3h 8m
8. Long Lived Assets5h 1m
9. Current Liabilities2h 19m
10. Time Value of Money1h 23m
- Time Value of Money Equations
  35m
- Using Time Value of Money Tables
  47m
11. Long Term Liabilities2h 45m
12. Stockholders' Equity2h 15m
13. Statement of Cash Flows2h 24m
14. Financial Statement Analysis5h 25m
15. GAAP vs IFRS56m

1. Introduction to Accounting

Types of Accounting

Financial Accounting

1. Introduction to Accounting

Types of Accounting

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Multiple Choice

Which of the following is the most liquid asset?

Cash

Accounts Receivable

Inventory

Prepaid Expenses

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Verified step by step guidance

Understand the concept of liquidity: Liquidity refers to how quickly and easily an asset can be converted into cash without losing value. The most liquid asset is cash itself, as it is already in its most usable form.

Analyze each option: Cash is the most liquid asset because it requires no conversion. Accounts Receivable represents money owed by customers, which requires collection efforts to convert into cash. Inventory requires selling and possibly additional processing to turn into cash. Prepaid Expenses are payments made in advance for goods or services, which cannot be directly converted into cash.

Compare the options: Cash is immediately available for use, while the other assets require additional steps or processes to become cash. This makes cash the most liquid asset.

Apply the definition of liquidity: Based on the definition, the asset that can be used immediately without any conversion process is the most liquid. Cash fits this criterion perfectly.

Conclude: Cash is the most liquid asset among the options provided because it is already in its usable form and does not require any further action to be utilized.