Arrange the following assets in the order of their liquidity, from the most liquid to least liquid: a $20 bill, a bond issued by publicly traded company, your car, and funds in checking account

Accounting Dec 18, 2020

Arrange the following assets in the order of their liquidity, from the most liquid to least liquid: a $20 bill, a bond issued by publicly traded company, your car, and funds in checking account.

Expert Solution

Most Liquid: funds in checking account. These funds are most liquid because the owner can withdraw and use them to meet the obligations of the businesses.

Second-Most Liquid: a bond issued by the publicly traded company. Bonds from public companies can be exchanged for money within a few days.

Third-Most Liquid: a $20 bill. This is a current liability that should be received within a short period.

Least Liquid: Your car. A car is a fixed asset, and it may take longer before you find a buyer. Moreover, negotiations and other government requirements will delay the selling of the car.

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