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 will 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 is expected to be converted into cash within one year. Therefore, cash and other assets owned by the firm that will convert to cash within the next year are considered current assets. Choices A, B, and E are incorrect because they do not accurately define current assets, and choice C is not always correct as a firm's cash on hand may not be the only current asset they possess.

A Current Asset Is Best Defined As