Which term refers to assets that are easily converted into cash?

• A. Fixed assets
• B. Liquid assets
• C. Intangible assets
• D. Long-term investments

Answer: (B)

The main idea here is liquidity—the ease with which an asset can be turned into cash. Assets that are highly liquid can be sold quickly with little or no loss in value, such as cash itself, checking or savings accounts, and marketable securities. That’s why the term that fits best is liquid assets: they are readily convertible to cash when needed.

Fixed assets, like buildings and equipment, are long-term and not quickly sold, so they aren’t considered liquid. Intangible assets, such as patents or goodwill, don’t have a straightforward, rapid sale path and can be difficult to convert to cash. Long-term investments can be sold, but they aren’t as readily convertible to cash as the assets labeled liquid, since they may require time or may involve price impact to convert quickly.