Question

In: Accounting

The most conservative way of measuring cash position is reflected by which line item or line...

The most conservative way of measuring cash position is reflected by which line item or line items on the balance sheet?

  • A. Cash and cash equivalents

  • B. Accounts receivable

  • C. Retained earnings

  • D. Current assets

Solutions

Expert Solution

The most conservative way of measuring cash position is reflected by which line item or line items on the balance sheet?

Option D)  Current Assets

Current Assets including Cash & cash equivalents, Accounts receivable and Inventories

Net Cash depicts the liquidity position of a company and is calculated by deducting the current liabilities from the cash balance reported on the company’s financial statements at the end of a particular period and is looked at by analysts and investors to understand the financial and liquidity position of the company.

Net cash by deducting current liabilities from the cash balance (cash and cash equivalents) at the end of the period. Cash balance here includes cash, liquid assets (assets that we can quickly convert into cash)


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