Final answer:
Quick assets are highly liquid assets including cash, current investments, and accounts receivable. They do not include prepaid insurance as it does not convert to cash quickly. They are crucial to assess a company's immediate liquidity on the balance sheet.
Step-by-step explanation:
Quick assets typically include items that can be converted to cash relatively quickly and are used to evaluate the immediate liquidity of a company. They include cash, current investments, and accounts receivable; however, they do not normally include prepaid insurance as it is not easily convertible to cash.
On a balance sheet, quick assets are important to determine a company's asset-liability time mismatch, measuring the ability to cover short-term obligations without the need to sell or liquidate long-term assets.
A bank's assets, for example, would include cash in their vaults, reserves held at the Federal Reserve Bank, loans made to customers, and bonds. The liquidity and management of these assets are crucial for the bank capital and overall financial stability.