Which of the following is NOT a liquid asset?

• A. Fixed assets
• B. Liquid assets
• C. Cash
• D. Debtors

Answer: (A)

Liquidity is about how easily an asset can be turned into cash without losing value. Cash is already cash, so it’s the most liquid. Debtors, or accounts receivable, are also fairly liquid because they’re expected to be converted to cash within a short period as customers pay. Fixed assets, like buildings and machinery, are long-term and tied up in the business; selling them quickly would be difficult and could reduce their value, so they’re not considered liquid. The option labeled liquid assets defines assets that are liquid, so it cannot be the non-liquid one.