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Jan 9, 2024
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Consider the relative liquidity of the following assets:
Assets
1.
A share in a publicly traded company
2.
The funds in a money market account
3.
A $10 bill
4.
A painting you own
Select the assets in order of their liquidity, from most liquid to least liquid.
Explanation:
Liquidity
refers to how quickly an asset can be converted into a medium of exchange.
Cash or currency can be used immediately as a medium of exchange, so a $10.00 bill is the most liquid
asset listed here.
The funds in a money market account must be withdrawn before they can be used to purchase goods
and services, but this transaction usually can be done within a day or two, assuming the account is with a
local bank.
A broker can sell a share in a publicly traded company within a short period of time, and then it may take
a few days for the accounts to settle and for you to receive your cash.
A painting you own is the least liquid of the assets because it may take weeks or even months to find a
buyer and get your cash.
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Related Questions
Using the data given below, compute for the total amount of items that meet the definition of financial asset
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P 100,000
Fair value through profit or loss securities
500,000
Investment in associate
2,000,000
Trade receivable
1,000,000
Inventories
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Prepaid insurance
50,000
Interest rate swap receivable
200,000
Investment in debt securities – FVTOCI
400,000
Investment in debt securities – AC
350,000
Land
2,000,000
Buildings
3,000,000
Machinery and equipment
1,500,000
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250,000
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Fitcom Corporation
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Liabilities
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$0
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633
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d. To keep the transactions for foreign trading.
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$574
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Accounts payable
$0
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210
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Accruals
127
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616
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500,000
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2,000,000
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1,000,000
Inventories
800,000
Prepaid rent
50,000
Interest rate swap receivable
200,000
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400,000
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300,000
Land
2,000,000
Buildings
3,000,000
Machinery and equipment
1,500,000
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250,000
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LeBron Sports Equipment Corporation
Free Spirit Industries Corporation
Assets
Liabilities
Current assets
Current liabilities
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$3,157
$2,029
Accounts payable
$0
$0
Accounts receivable
1,155
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Accruals
696
0
Inventories
3,388
2,178
Notes payable
3,944
3,712
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$7,700
$4,950
Total current liabilities
$4,640
$3,712
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Long-term bonds
5,672
4,538
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6,050
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b.Assets decrease by P100,000 and liabilities increase by P500,000
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d.Assets increase by P400,000 and liabilities decrease by P500,000
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NEED HELP CONTINUATION
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Marketable securities (short-term investments) ……………………………............ $53,892
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E. Explain what is meant by the balance sheet presentation of Apple Inc.’s Accounts Receivable as shown in the table.
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