Which term describes cash and other assets expected to be exchanged for cash or consumed within a year?

Which term describes cash and other assets expected to be exchanged for cash or consumed within a year?

• A. Current liabilities
• B. Current assets
• C. Fixed assets
• D. Intangible assets

Answer: (B)

The term that describes cash and other assets expected to be exchanged for cash or consumed within a year is "current assets." Current assets are a vital component of a company's balance sheet, representing the resources that are expected to be converted to cash or used up within one operating cycle, typically a year. This category includes not only cash but also accounts receivable, inventory, and other short-term investments that can easily be liquidated. Understanding current assets is crucial for evaluating a company's liquidity position, as they directly reflect the firm's ability to meet its short-term obligations and fund its operating needs. By tracking current assets, investors and stakeholders can assess the financial health and operational efficiency of a business, making it an essential focus for financial analysis.

The term that describes cash and other assets expected to be exchanged for cash or consumed within a year is "current assets." Current assets are a vital component of a company's balance sheet, representing the resources that are expected to be converted to cash or used up within one operating cycle, typically a year. This category includes not only cash but also accounts receivable, inventory, and other short-term investments that can easily be liquidated.

Understanding current assets is crucial for evaluating a company's liquidity position, as they directly reflect the firm's ability to meet its short-term obligations and fund its operating needs. By tracking current assets, investors and stakeholders can assess the financial health and operational efficiency of a business, making it an essential focus for financial analysis.