Question

which of the following is true of current assets?
they are actually liabilities.
they are relatively liquid.
they are closely related to equity.

Explanation:

Current assets are assets that can be converted to cash or used up within a short period (usually a year). Liquidity refers to how easily an asset can be converted to cash. Current assets like cash, accounts receivable, inventory (in some cases) are relatively liquid as they can be turned into cash or used in operations quickly. The first option is wrong because current assets are assets, not liabilities. The third option is wrong as equity is the residual interest in assets after deducting liabilities, and current assets are not closely related to equity in that sense.

Answer:

B. They are relatively liquid.