A current asset is one that the company:
A) has owned for over one year.
B) has owned for over five years.
C) will use up or converted into cash in less than 12 months.
D) has updated to reflect its current value.

Question

Quizplus · Accepted Answer

A current asset is an asset that is expected to be either consumed or converted into cash within 12 months of the balance sheet date. This includes things like cash and cash equivalents, accounts receivable, and inventory. Choice A and B are incorrect because an asset owned for over one or five years may still be a current asset if it is expected to be converted into cash within the next 12 months. Choice D is incorrect because updating the value of an asset does not determine whether it is a current asset or not.

A Current Asset Is One That the Company