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Which one of the following represents the most liquid asset? A. $100 accounts receivable that will be collected in full next week. B. $100 of inventory which is sold today on credit for $103. C. $100 of inventory which is discounted and sold for $97 cash today. D. $100 of inventory that is sold today for $100 cash. E. $100 account receivable that is discounted and collected for $96 today.

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Answer:

D. $100 of inventory that is sold today for $100 cash.

Explanation:

Liquidity of an asset measures how fast it is to convert an asset to cash.

$100 of inventory that is sold today for $100 cash immediately and it still retains its value . While the other assets are converted to cash with a lag; they aren't immediately converted to cash.

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