Asked by Fatin Izzati on May 18, 2024
Verified
Current assets are assets expected to
A) be converted to cash within twelve months.
B) be converted to cash within twelve months or one operating cycle if it is longer than twelve months.
C) remain on the books for at least twelve months.
D) remain on the books for at least twelve months or one operating cycle if longer than twelve months.
Current Assets
Assets that are expected to be converted into cash, sold, or consumed within one year or within the business's normal operating cycle if longer.
Operating Cycle
The average period of time it takes for a business to convert its inventory into cash through sales.
Twelve Months
A term commonly used in finance and business to refer to a full fiscal or calendar year.
- Gain insight into how current and non-current assets are presented and reported on the balance sheet.
Verified Answer
CI
CIELO IBARRAMay 21, 2024
Final Answer :
B
Explanation :
Current assets are expected to be converted to cash within twelve months or one operating cycle if it is longer than twelve months. This includes assets such as inventory, accounts receivable, and prepaid expenses that are expected to be converted to cash within this timeframe. Therefore, choice B is the best option as it accurately reflects the definition of current assets.
Learning Objectives
- Gain insight into how current and non-current assets are presented and reported on the balance sheet.