What are current assets?
A) Assets purchased within the last year.
B) Assets which will be used within the next month.
C) Assets are the net working capital of the firm.
D) Assets expected to be converted into cash within one year or operating cycle.

Question

Quizplus · Accepted Answer

Current assets are those assets that are expected to be converted into cash within one year or the operating cycle of the business, whichever is longer. This includes cash, accounts receivable, inventory, and other assets that are expected to be sold, consumed or utilized during the normal course of business operations. Option A is incorrect as the time frame for assets being considered current is one year, not one year from purchase. Option B is incorrect as the time frame for assets being considered current is one year, not one month. Option C is incorrect as current assets are not the same as net working capital, which is the difference between current assets and current liabilities.

What Are Current Assets