Question

How are liquid assets different from other assets?What is the main difference in the way that "earned income" and "capital gains (or portfolio income)" are acquired?

Answer 1

Answer: All assets represent money, but only liquid assets can be easily turned into spendable money.

Earned income is money you received for a job performed and capital gains are profits from investments.

Step-by-step explanation: Because this is the definition of liquid assets: A liquid asset is cash on hand or an asset that can be readily converted to cash. An asset that can readily be converted into cash is similar to cash itself because the asset can be sold with little impact on its value.

-Earned income refers to salary, bonuses, commissions, tips that you receive because of a job that you have done from an employer or your business.

-Capital gains  refer to money that you receive because of the sale of a capital asset like stocks or real estate.