Which item is a current asset?

Which item is a current asset?

• A. Patent
• B. Land
• C. Inventory
• D. Equipment

Answer: (C)

Assets are grouped by how quickly they can be turned into cash. Current assets are those you expect to use or convert to cash within one year or your operating cycle. Inventory fits this because it consists of goods held for sale that are typically sold within the year. The other items are long-term or non-cash resources: a patent is an intangible asset with a longer useful life and is amortized; land is a fixed asset used over many years; equipment is property, plant, and equipment that is depreciated over time. So inventory is the current asset.

Assets are grouped by how quickly they can be turned into cash. Current assets are those you expect to use or convert to cash within one year or your operating cycle. Inventory fits this because it consists of goods held for sale that are typically sold within the year. The other items are long-term or non-cash resources: a patent is an intangible asset with a longer useful life and is amortized; land is a fixed asset used over many years; equipment is property, plant, and equipment that is depreciated over time. So inventory is the current asset.