A liquid asset can be converted quickly to cash with little sacrifice in its value. Which of the...

Question:

A liquid asset can be converted quickly to cash with little sacrifice in its value.

Which of the following asset classes is generally considered to be the least liquid?

(a) Accounts receivable

(b) Inventories

(c) Cash

Factoring:

Factoring is the practice of selling accounts receivable to outside third parties, such as collection agencies. Outsourcing collection services can be a cost-effective way to collect short term debts. Accounts receivable are usually sold at a small discount because the clients are solvent companies that can easily make the payments.

Answer and Explanation: 1

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Cash is the most liquid asset, as it is already converted into cash. Accounts receivable are the second most liquid asset. If they need to be...

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What Are Current Assets? - Definition, Examples & Calculation

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Chapter 3 / Lesson 8
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What are current assets on a balance sheet? Learn the definition of an asset and see current assets examples. Compare current assets to noncurrent assets.


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