What is a "current asset"?
A)An asset expected to be consumed in the ordinary operating cycle of the business.
B)An asset not expected to be consumed in the ordinary operating cycle of the business.
C)An asset expected to be used for investment purposes.
D)An asset, such as cash, that is restricted from being used for at least 12 months.

Question

Quizplus · Accepted Answer

A current asset is an asset that is expected to be consumed or converted into cash within the normal operating cycle of a business, typically 12 months. Examples include cash, inventory, and accounts receivable. Choice B is incorrect because an asset that is not expected to be consumed within the operating cycle of the business is classified as a non-current or long-term asset. Choice C is incorrect because an asset expected to be used for investment purposes would also be classified as a non-current or long-term asset. Choice D is incorrect because a restricted asset is not necessarily a current asset, as it may not be expected to be consumed or converted into cash within the normal operating cycle of the business.

What Is a "Current Asset