[amp_mcq option1=”Cash asset” option2=”Operating asset” option3=”Intangible assets” option4=”Cash equivalent” correct=”option4″]
The correct answer is: D. Cash equivalent
A cash equivalent is a short-term, highly liquid investment that is readily convertible to known amounts of cash and is subject to insignificant risk of changes in value. Cash equivalents include:
- Money market funds
- Treasury bills
- Commercial paper
- Short-term certificates of deposit
Cash assets are assets that are readily available to meet current obligations. They include cash on hand, demand deposits, and short-term investments.
Operating assets are assets that are used in the day-to-day operations of a business. They include inventory, accounts receivable, and prepaid expenses.
Intangible assets are assets that do not have physical substance but have value because of the rights or privileges they convey. They include patents, trademarks, and goodwill.