What are Marketable Securities?

• A. A liability.
• B. A current asset consisting of interest or dividend-yielding holdings expected to be converted to cash within a year; Also called short-term investments including stocks, bonds, CD's and time deposits. Listed at their original cost.
• C. Fixed assets.
• D. Current assets including cash equivalents.

Answer: (B)

Marketable securities are short‑term, highly liquid investments that a company can quickly convert to cash to meet near‑term needs. They are reported as current assets on the balance sheet because they are expected to be turned into cash within a year or the operating cycle. Typical forms include stocks, bonds, certificates of deposit, and other time deposits. They’re often shown at their original cost for reporting purposes, though the measurement can vary by policy. They are not liabilities or fixed assets, and they’re distinct from cash equivalents, which are the most liquid near‑cash items with very short maturities (usually three months or less). In short, marketable securities are current, marketable investments that will be cash within a year.