Question

Accounts readily available to pay off debt or use in operations are considered ______ while highly liquid investments with a maturity date of 3 months are considered _____.

a) Marketable, Convertible
b) Current, Marketable
c) Marketable, Current
d) Convertible, Current

Answer 1

The correct answer to the question is b) Current, Marketable, which refers to the liquidity classification of assets used for purchases or settling debts.

Step-by-step explanation:

The question addresses the classification of assets based on their liquidity, a concept referring to the ease with which financial assets can be utilized for purchases or to pay off debts. Accounts that are readily available for these purposes are known as current assets, while highly liquid investments with a short-term maturity date (typically 3 months) are characterized as marketable securities. Therefore, the appropriate completion for the statement would be:

• Accounts readily available to pay off debt or use in operations are considered current assets.
• Highly liquid investments with a maturity date of 3 months are considered marketable securities.

Hence, the correct answer to the question is b) Current, Marketable.