Final answer:
The statement suggesting current assets to be considered fixed assets is false. Current assets are very liquid and expected to be converted to cash within one year, whereas fixed assets are long-term and have a lifespan extending beyond one year.
Step-by-step explanation:
The statement in question -- "Liquidating current assets are really fixed assets since they have lives greater than one year." -- is false. The key characteristic that distinguishes current assets from fixed assets is their liquidity, or how quickly they can be converted into cash.
Current assets such as cash, inventory, and accounts receivable are expected to be converted into cash within one year or within the business cycle, making them very liquid. Fixed assets, on the other hand, are long-term assets like buildings, machinery, and vehicles, which are used by a company in its operations and have useful lives extending beyond one year.
Fixed assets and current assets are both accounted for on the balance sheet, but they serve different purposes within a company's financial ecosystem. While fixed assets are essential for long-term operations and production, current assets are crucial for the day-to-day financial activities, ensuring that the company can cover its short-term obligations and operate smoothly.