Of the following items, the one which should be classified as a current asset is
A) trade installment receivables normally collectible in 20 months.
B) a deposit on equipment ordered, delivery of which will be made within 7 months.
C) cash designated for the redemption of callable bonds.
D) cash surrender value of a life insurance policy of which the company is a beneficiary.

Question

Quizplus · Accepted Answer

Trade installment receivables normally collectible in 20 months are classified as current assets because they are expected to be converted into cash within the operating cycle of the business, which is typically one year or less, but can be longer depending on the nature of the business.

Of the Following Items, the One Which Should Be Classified