A Current Asset is best described as which?

A Current Asset is best described as which?

• A. A short term asset that will be owned less than a year. For example stock
• B. An asset owned for more than a year
• C. A liability
• D. Income from sales

Answer: (A)

Current assets are resources the business expects to turn into cash or use up within one year (or its normal operating cycle). A short-term asset that will be owned for less than a year fits this idea, and stock (inventory) is a common example because it’s typically sold or converted to cash within the year. The other options describe items that aren’t current assets: an asset held for more than a year is a long-term asset, a liability is not an asset, and income from sales is revenue. So, describing a short-term asset like stock as a current asset is the best match.

Current assets are resources the business expects to turn into cash or use up within one year (or its normal operating cycle). A short-term asset that will be owned for less than a year fits this idea, and stock (inventory) is a common example because it’s typically sold or converted to cash within the year. The other options describe items that aren’t current assets: an asset held for more than a year is a long-term asset, a liability is not an asset, and income from sales is revenue. So, describing a short-term asset like stock as a current asset is the best match.