A current asset is one that:
A) the company has owned for over one year.
B) the company has owned for over five years.
C) the company will use up or convert into cash in less than one year.
D) the company will use up or convert into cash in less than five years.

Question

Quizplus · Accepted Answer

A current asset is an asset that is expected to be converted into cash within one year or used up within one operating cycle, whichever is longer. Current assets are expected to be regularly turned over or converted into cash and are used to fund a company's day-to-day operations. Option A and B are incorrect because they refer to fixed assets, which are not considered current assets. Option D is incorrect because five years is significantly longer than the typical timeframe for a current asset.

A Current Asset Is One That