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Jun 27, 2024 · A liquid asset is cash on hand or an asset that can be easily converted to cash. In terms of liquidity, cash is supreme since cash as legal tender is the ultimate goal.
Oct 14, 2024 · Cash on hand is considered to be a liquid asset because it can be readily accessed. The money in your checking account, savings account, or money market account is considered liquid because it...
- Steven Nickolas
- 2 min
Current Assets and Liquid Assets are both used to assess a company’s cash position and are also applied in the process of ratio analysis to compare with other related variables. They are similar, however, there is a slight difference between current assets and liquid assets.
Oct 8, 2024 · Current assets are a company's short-term assets that can be liquidated quickly and used for a company's immediate needs. Noncurrent assets are long-term assets that have a useful life of more...
- Steven Nickolas
- Petty Cash: Petty cash is classified as current assets, and it refers to a small amount of cash used in operation for small and immediate expenses. This cash usually ranks from USD 500 to USD 2,000 based on the size and nature of the operation.
- Cash on Hand: Cash on hand is the current assets that come from cash sales or cash collection from the entity’s customers. This cash usually does not allow making payment to suppliers before it banks in or transfers to petty cash.
- Cash in Bank: Cash in the bank refers to all kinds of money that the entity has in the bank. It can be a current account, savings account, fixed-term deposit, or similar.
- Cash Advance: A cash advance is also classed as current assets, and its nature is quite similar to cash on hand and cash in the bank. Cash advance occurs when staff needs some cash to spend for some kind of mission or event or some time to purchase sometimes.
Current assets are typically more liquid than non-current assets, meaning they can be easily converted into cash. Examples of current assets include cash, accounts receivable, and inventory. Non-current assets, on the other hand, are usually less liquid and may take longer to convert into cash.
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Jun 8, 2023 · The key components of current assets are cash and cash equivalents, marketable securities, accounts receivable, inventory, prepaid expenses, and other liquid assets. It excludes noncurrent assets such as property, plant, and equipment, intangible assets, and goodwill.
