The basis for classifying assets as current or noncurrent is the period of time normally required by the accounting entity to convert cash invested in
A) inventory back into cash, or 12 months, whichever is shorter.
B) receivables back into cash, or 12 months, whichever is longer.
C) tangible fixed assets back into cash, or 12 months, whichever is longer.
D) inventory back into cash, or 12 months, whichever is longer.

Question

Quizplus · Accepted Answer

The basis for classifying assets as current or noncurrent is typically the period of time normally required by the accounting entity to convert the asset back into cash, or 12 months, whichever is longer. This applies to inventory as it is expected to be sold and converted into cash within the normal operating cycle of the business, which is usually longer than 12 months.

The Basis for Classifying Assets as Current or Noncurrent Is