Current assets are best described as what?

Current assets are best described as what?

• A. assets that can be converted into cash within one year
• B. long-term investments
• C. fixed assets used for more than a year
• D. intangible assets only

Answer: (A)

Current assets are assets expected to be converted into cash within one year or within the normal operating cycle. This short-term liquidity criterion is what defines them, and it includes items like cash, accounts receivable, and inventory. Long-term investments and fixed assets are not current because they provide value beyond a year, and intangible assets aren’t defined by the short time frame either. So the description that emphasizes conversion to cash in the near term best captures what current assets are.

Current assets are assets expected to be converted into cash within one year or within the normal operating cycle. This short-term liquidity criterion is what defines them, and it includes items like cash, accounts receivable, and inventory. Long-term investments and fixed assets are not current because they provide value beyond a year, and intangible assets aren’t defined by the short time frame either. So the description that emphasizes conversion to cash in the near term best captures what current assets are.