What is a current asset?

• A. Assets that can be converted into cash within the next year
• B. Long-term investments
• C. Intangible assets only
• D. Liabilities due within a year

Answer: (A)

Current assets are resources a company expects to convert into cash or use up within a short period, typically one year or one operating cycle. This includes items like cash, marketable securities, accounts receivable, and inventory—things that are readily converted to cash or consumed in the normal course of business to support day-to-day operations.

That’s why the statement describing assets that can be converted into cash within the next year is the best fit. It matches the defining horizon for current assets.

Long-term investments are meant to be held longer than a year, so they aren’t current. Intangible assets are a broad category that isn’t defined by a one-year horizon, and some are non-current. Liabilities due within a year are current liabilities, not assets, so they don’t describe current assets.