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The ability of a business to turn assets into cash to meet short-term needs is its:
ALegality
BLongevity
CLeverage
DLiquidity
Answer & Solution
Correct answer: D. Liquidity
1. Short-term bills have to be paid in cash, not in buildings.
2. What matters is how fast assets can become cash.
3. That ability is liquidity.
_Source: OpenStax Principles of Financial Accounting, Chapter 2, Introduction to Financial Statements._
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