What are current assets?

BlackTom题目解析

Question

What are current assets?

BlackTom题目解析

BlackTom AI · Accepted Answer

Question restatement: What are current assets?

Option 1: 'Assets that provide benefits within the next year.' This is the correct understanding of current assets. They are resources expected to be converted into cash, sold, or consumed within one year or the operating cycle, whichever is longer, thus providing benefits in the near term. The time frame emphasis aligns with standard accounting definitions.

Option 2: 'Any assets that were purchased for cash.' This is incorrect because the method of purchase (cash vs. credit) does not define whether an asset is current. An asset could be acquired with cash but still be a long-term asset if its useful life exceeds one year.

Option 3: 'Assets that will be used for many years.' This describes long-term or non-current assets, not current assets. Assets with multi-year usefulness fall outside the one-year horizon that characterizes current assets.

Option 4: 'Assets that must be paid for within 12 months.' This statement confuses assets with liabilities. An obligation to pay within 12 months relates to current liabilities, not to current assets.

In summary, option 1 correctly captures the essence of current assets as items expected to provide benefits within the coming year, while options 2, 3, and 4 mix in payment method, asset longevity, or liability concepts that do not define current assets.

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Referring to the Balance Sheet printed in Step 22 of the Practical Exam, what is the amount shown for Total current assets?

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