A current asset is
A) usually found as a separate classification in the income statement.
B) expected to be converted to cash or used in the business within a relatively short period of time.
C) the last asset purchased by a business.
D) an asset which is currently being used to produce a product or service.

Question

Quizplus · Accepted Answer

A current asset is an asset that is expected to be converted into cash or used up within a year or operating cycle (whichever is longer). Therefore, option B is the correct answer as it describes the characteristic of a current asset. Option A is not correct as current assets are typically reported on the balance sheet, not income statement. Option C is incorrect as the timing of purchase is not a determinant of whether an asset is current or not. Option D is also incorrect as an asset being used does not necessarily make it a current asset.

A Current Asset Is