Which of the following is a current asset example?

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Multiple Choice

Which of the following is a current asset example?

Current assets are resources a company expects to convert to cash or use up within one year (or the operating cycle). Prepaid expenses fit this category because they are payments made in advance for goods or services the company will receive within that near term (for example, prepaid insurance or rent). They are used up as time passes, turning into consumed services rather than remaining as long-term value. Equipment, intangible assets, and goodwill are long-term assets; they are not expected to be converted to cash or consumed within a year, so they aren’t current assets. That’s why prepaid expenses is the correct example.

Current assets are resources a company expects to convert to cash or use up within one year (or the operating cycle). Prepaid expenses fit this category because they are payments made in advance for goods or services the company will receive within that near term (for example, prepaid insurance or rent). They are used up as time passes, turning into consumed services rather than remaining as long-term value. Equipment, intangible assets, and goodwill are long-term assets; they are not expected to be converted to cash or consumed within a year, so they aren’t current assets. That’s why prepaid expenses is the correct example.

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