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Simple English definitions for legal terms
near money
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A quick definition of near money:
Near money is a type of asset that can be easily converted into cash, such as a marketable security or an account receivable. It is considered a current asset because it is expected to be converted into cash within the next year. Other types of assets include fixed assets, which are long-term assets used in the operation of a business, and intangible assets, which are nonphysical assets that can be converted to cash. It is important for individuals and businesses to manage their assets effectively to ensure financial stability and success.A more thorough explanation:
Near money refers to assets that can be easily converted into cash, such as marketable securities, notes, or accounts receivable. These assets are considered current assets because they are expected to be converted into cash within the next 12 months or the normal operating cycle of a business. Near money is also known as liquid asset, quick asset, or financial asset.
Examples of near money include:
- Marketable securities
- Money market accounts
- Certificates of deposit (CDs)
- Treasury bills
- Accounts receivable
These examples illustrate how near money can be easily converted into cash. For instance, marketable securities can be sold quickly to raise cash, while accounts receivable can be collected from customers to generate cash. Near money is important for businesses because it provides them with the flexibility to meet their short-term financial obligations.