Of the following items, the one that should be classified as a current asset is
A) Trade installment receivables normally collectible in 18 months
B) Cash designated for the redemption of callable preferred stock
C) Cash surrender value of a life insurance policy of which the company is beneficiary
D) A deposit on machinery ordered, delivery of which will be made within six months

Question

Quizplus · Accepted Answer

A deposit on machinery ordered, delivery of which will be made within six months should be classified as a current asset because it is expected to be turned into cash or used up within one year. The other options may not necessarily be collected or used within one year and may be classified as long-term assets.

Of the Following Items, the One That Should Be Classified