Current assets that can be transferred into cash within 3 months is known as?
Answer (2)
Current assets that can be converted into cash within three months are known as "cash equivalents" or "liquid assets". These include marketable securities, treasury bills, and cash itself, which are all easily accessible and important for meeting short-term financial obligations. Understanding these assets helps businesses manage their liquidity effectively.
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ANSWER:
D. Cash equivalent
THE COMPLETE QUESTION:
A current asset that is convertible to cash within 3 months can be referred to as
A. Cash asset
B. Operating asset
C. Intangible assets
D. Cash equivalent
EXPLANATION:
"Cash equivalents"are liquid assets that can be converted into cash in three months. These assets are cash-like due to their low risk and liquidity. Current assets, such as cash and equivalents, indicate a company's financial stability.
To maintain liquidity and meet short-term obligations, they are crucial. Overall, cash and equivalents are essential to a firm's financial management because they give stability and flexibility in uncertain times.
