Which term covers cash or other assets that will be converted into cash or consumed within one year?

Which term covers cash or other assets that will be converted into cash or consumed within one year?

• A. current assets
• B. Assets
• C. liabilities
• D. fixed assets

Answer: (A)

Classifying assets by liquidity focuses on how quickly you can turn resources into cash or use them up. The term for cash or other assets expected to be converted into cash or consumed within one year is current assets. This group includes cash, accounts receivable, inventory, and other short-term investments. They are distinct from non-current or fixed assets, which provide value over longer periods, and from liabilities, which are obligations rather than resources. The one-year time frame (or the operating cycle, if longer) sets the boundary for current assets and reflects a company’s ability to meet short-term needs.

Classifying assets by liquidity focuses on how quickly you can turn resources into cash or use them up. The term for cash or other assets expected to be converted into cash or consumed within one year is current assets. This group includes cash, accounts receivable, inventory, and other short-term investments. They are distinct from non-current or fixed assets, which provide value over longer periods, and from liabilities, which are obligations rather than resources. The one-year time frame (or the operating cycle, if longer) sets the boundary for current assets and reflects a company’s ability to meet short-term needs.