Which of the following is a current asset in the example balance sheet?

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Multiple Choice

Which of the following is a current asset in the example balance sheet?

Explanation:
Current assets are resources a business expects to convert into cash or use up within one year. Cash fits this idea perfectly because it is already cash and readily available. Equipment, by contrast, is a long-term asset because it provides value over several years through ongoing use. Long-term debt is a liability, not an asset. Mortgage payments aren’t assets either; they reflect cash going out toward a loan and, depending on the context, relate to liabilities or expenses rather than assets. So Cash is the current asset in the balance sheet.

Current assets are resources a business expects to convert into cash or use up within one year. Cash fits this idea perfectly because it is already cash and readily available. Equipment, by contrast, is a long-term asset because it provides value over several years through ongoing use. Long-term debt is a liability, not an asset. Mortgage payments aren’t assets either; they reflect cash going out toward a loan and, depending on the context, relate to liabilities or expenses rather than assets. So Cash is the current asset in the balance sheet.

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