Assets are classified as current for reporting purposes when
A)shares of common stock in a company's important supplier are acquired to ensure continued availability of raw materials.
B)shares of common stock in another company are acquired to diversify operations.
C)expenditures are made in developing new technologies or advertising products.
D)they are reasonably expected to be turned into cash or to be sold or consumed during the normal operating cycle of the business.
E)None of these answer choices is correct.

Question

Quizplus · Accepted Answer

Assets are classified as current when they are expected to be turned into cash or sold, or consumed within the normal operating cycle of the business. This means that they will be used up or converted into cash within a year from the balance sheet date. Choice A and B refer to investments, which would be classified as long-term assets. Choice C refers to expenditures, which are usually classified as expenses on the income statement rather than assets on the balance sheet. Therefore, the correct answer is D.

Assets Are Classified as Current for Reporting Purposes When