Question

Financial assets may include:__________ a. capital assets that can be sold. b. cash, investments, and receivables, inventories, prepayments. c. cash, investments, receivables & capital assets d. only cash and other governmental resources that have been converted to cash by the end of the current reporting period.

Answer 1

Answer:

b. cash, investments, and receivables, inventories, prepayments

Explanation:

Financial assets refer to liquid assets which derive their value from ownership rights and claims. For example, bonds, mutual funds, etc are financial assets.

In the given case, cash, investments, receivables, inventories, prepayments (prepaid expense) etc are liquid assets and current assets which can be readily converted to cash. Investments could be both short term and long term.

Investments in treasury bonds are highly liquid.

Capital assets are usually those assets with maturity period of more than one year and unlike current assets are not intended for sale.