Question

The assets that can be converted into cash within a short period (i.e. 1 year or less) are known as _____________.

• A. Current Assets
• B. Fixed Assets
• C. Intangible Assets
• D. Investments

Hint:

Examples of current assets include cash, inventory, and accounts receivable.

Answer 1

The Correct Option is A

Topic: Classification of Assets
Step 1: Understanding the Question:
Identify the category of assets that represent high liquidity and short-term usage (within 12 months).
Step 2: Detailed Explanation:
- Current Assets: Assets expected to be used or converted to cash within one year (e.g., Stock, Cash, Debtors).
- Fixed Assets: Long-term assets used for business operations (e.g., Land, Machinery).
- Intangible Assets: Assets with no physical existence (e.g., Patents, Goodwill).
Step 3: Final Answer:
Assets converted to cash within a year are Current Assets.
Final Answer: Current Assets.