IB Vine Accounting Practice Test 2026 - Free Accounting Practice Questions and Study Guide

The accurate statement regarding liquid assets is that they include cash and cash-equivalents that are readily available. Liquid assets are defined as assets that can be quickly and easily converted into cash without a significant loss in value. This characteristic allows individuals or businesses to meet immediate financial obligations, such as paying off short-term liabilities. Cash itself is the most liquid asset, while cash-equivalents like money market funds or Treasury bills can also be considered liquid since they can be swiftly converted to cash.

The other statements involve misunderstandings about the nature of liquid assets. Liquid assets are specifically designed for quick access rather than long-term investment or substantial returns; hence, they do not generate high returns through investment and are not typically associated with long-term investments.