A current asset is ________.
A) an amount due from a customer who has purchased goods on credit
B) an asset with long-term use or value such as land, buildings, and equipment
C) an asset that can or will be converted to cash within the following year
D) a nonphysical asset such as a patent or trademark

Question

Quizplus · Accepted Answer

A current asset is an asset that is expected to be converted to cash within the next year or operating cycle, whichever is longer. This includes cash, accounts receivable, inventory, and prepaid expenses. Choice A is specifically referring to accounts receivable which is one type of current asset. Choice B is referring to a fixed asset, which has a long-term use or value and is not expected to be converted to cash in the near future. Choice D is referring to an intangible asset, which may or may not be a current asset depending on whether it can be converted to cash within the next year.

A Current Asset Is ________