Final answer:
Current assets on a financial statement are items that can be quickly converted to cash or sold within 12 months. Examples of current assets include cash, accounts receivable, and inventory.
Step-by-step explanation:
On a financial statement, items that can be quickly converted to cash or that will be sold within 12 months are known as current assets. Current assets are easily liquidated into cash and include items such as cash on hand, accounts receivable, and inventory. These assets are important for assessing a company's liquidity and ability to meet short-term obligations.
For example, if a company has a high amount of cash and accounts receivable, it suggests that it has the ability to generate cash inflows quickly. On the other hand, if a company has a high amount of obsolete inventory, it may face difficulties in quickly converting it into cash.