Question

Assets that are expected to be converted to cash, sold, or used up during the next 12 months, or within the business's normal operating cycle if the cycle is longer than a year, are called ________ assets.

A) intangible
B) plant
C) long-term
D) current

Answer 1

Current assets are expected to be converted to cash, sold, or used within 12 months or a business cycle. They are vital for day-to-day operations and financial planning of a business.

Step-by-step explanation:

Assets that are expected to be converted to cash, sold, or used up during the next 12 months, or within the business's normal operating cycle if the cycle is longer than a year, are called current assets. The correct answer to the question is D) current assets. These include assets such as cash, inventory, and accounts receivable that are used in the day-to-day operations of a business. They are distinct from long-term assets, such as machinery, buildings (plant), or patents (intangible), which are utilized by a business over a longer period and are not readily converted into cash within a year. Investment strategies considering the different types of assets are significant as they help in financial planning and managing the financial assets of the business more efficiently.