A current asset is best defined as
A)the market value of all assets currently owned by the firm.
B)an asset the firm expects to purchase within the next year.
C)the amount of cash on hand the firm currently shows on its balance sheet.
D)cash and other assets owned by the firm that should convert to cash within the next year.
E)the value of fixed assets the firm expects to sell within the next year.

Question

Quizplus · Accepted Answer

A current asset is an asset that a company expects to convert to cash or consume within one year or the operating cycle, whichever is longer. These assets include cash, accounts receivable, inventory, and other assets that can be readily converted to cash within the next 12 months. Therefore, option D, i.e., cash and other assets owned by the firm that should convert to cash within the next year is the best definition of a current asset.

A Current Asset Is Best Defined as