When an investment is readily convertible to cash and the investor plans to convert the investment to cash within one year,the investment is reported on the balance sheet as:
A)a current asset.
B)a long-term asset.
C)stockholders' equity.
D)a cash equivalent.

Question

Quizplus · Accepted Answer

A current asset is defined as an asset that is expected to be converted into cash within one year or the operating cycle of the business, whichever is longer. Since the investment is expected to be converted into cash within one year, it should be reported as a current asset on the balance sheet.

When an Investment Is Readily Convertible to Cash and the Investor