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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
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...
- Steven Nickolas
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.
- 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.
A liquid asset is cash on hand or an asset other than cash that can be quickly converted into cash at a reasonable price. In other words, a liquid asset can be quickly sold on the market without a significant loss of its value. Generally, liquid assets are traded on well-established markets with a large number of buyers and sellers.
People also ask
Is cash on hand a liquid asset?
What are examples of liquid assets?
What are non-cash liquid assets?
Are noncurrent assets liquid?
Is a liquid asset a cash equivalent?
What is considered a non-liquid asset?
Cash on hand is the most liquid type of asset, followed by funds you can withdraw from your bank accounts. No conversion is necessary — if your business needs a cash infusion, you can access your funds right away. There are many sources of accessible, flexible capital.
