Cash is an example of which asset type?

Cash is an example of which asset type?

• A. Current asset
• B. Fixed asset
• C. Non-current asset
• D. Intangible asset

Answer: (A)

Cash is the most liquid asset, meaning it can be used immediately to pay expenses or invest in opportunities. Assets are grouped by how quickly they can be converted to cash and how long they stay in the business. Since cash is already cash and is expected to be used or converted within one year (or the operating cycle, if longer), it belongs in the current assets category. Fixed assets, like buildings or equipment, are long-term physical items. Non-current assets are those long-term resources not expected to be turned into cash within the year. Intangible assets are non-physical items such as patents or goodwill. Because of its immediate availability and short time horizon, cash is classified as a current asset.

Cash is the most liquid asset, meaning it can be used immediately to pay expenses or invest in opportunities. Assets are grouped by how quickly they can be converted to cash and how long they stay in the business. Since cash is already cash and is expected to be used or converted within one year (or the operating cycle, if longer), it belongs in the current assets category.

Fixed assets, like buildings or equipment, are long-term physical items. Non-current assets are those long-term resources not expected to be turned into cash within the year. Intangible assets are non-physical items such as patents or goodwill. Because of its immediate availability and short time horizon, cash is classified as a current asset.