Question

Amounts readily available to pay off debt or be used in operating are considered ______ while highly liquid investments with a maturity date of 3 months or less are considered _____________.

1) Current assets, Cash equivalents
2) Current liabilities, Marketable securities
3) Fixed assets, Long-term investments
4) Accounts payable, Accounts receivable

Answer 1

The question refers to 'current assets' as funds available for immediate use in business operations and 'cash equivalents' for highly liquid investments that are like cash due to their short maturity.

Step-by-step explanation:

Amounts readily available to pay off debt or be used in operating are considered current assets, while highly liquid investments with a maturity date of 3 months or less are considered cash equivalents. The correct answer to the question is 1) Current assets, Cash equivalents.

Current assets include cash and other assets that are expected to be converted to cash within a year, such as accounts receivable and inventory. On the other hand, cash equivalents are short-term investments that are easy to convert into cash and have little risk of change in value, making them similar to cash in terms of liquidity.