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

Question

Quizplus · Accepted Answer

Current assets are assets that can be converted into cash within one year or less. These assets include cash, accounts receivable, inventory, and prepaid expenses. Choice A is incorrect because assets owned for over one year are considered non-current assets. Choice B is incorrect because assets that will take five years or more to use up or convert into cash are considered long-term assets. Choice D is incorrect because assets that will take more than one year but less than five years to use up or convert into cash are considered intermediate-term assets.

A Current Asset Is One That