Which of the following best describes marketable securities?

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Study for the Texas Aandamp;M University (TAMU) ACCT229 Exam. Get exam-ready with flashcards, detailed explanations, and multiple choice questions. Enhance your understanding and boost your confidence!

Marketable securities are investments that a company can quickly convert into cash, typically within a short time frame, up to one year. The key characteristic of marketable securities is their liquidity, which means they can be easily traded or sold in the financial markets. This feature allows companies to manage their short-term financial needs effectively.

When understanding marketable securities, it is important to recognize that they include instruments such as stocks, bonds, and other financial assets that have a ready market and can be sold quickly without losing significant value. The one-year timeframe is standard for categorizing these types of investments, aligning with how companies assess current assets on their balance sheets.

The other options do not accurately define marketable securities. Assets sold after one year of ownership refer to long-term assets, not short-term investments. Cash held for immediate use describes cash flow rather than investments, and fixed assets used in operations pertain to physical assets required for a company's core business functions, not liquid investments. Thus, the option that emphasizes the expected sale of investments within one year most accurately captures the essence of marketable securities.