Which of the following is typically classified as a current asset?

• A. Equipment
• B. Long-term investments
• C. Cash
• D. Inventories

Answer: (C)

Current assets are resources a business expects to convert into cash or use up within one year or its operating cycle. Cash fits this category perfectly because it is already in liquid form and readily available to settle short-term obligations.

Equipment is a long-lived, tangible asset used over several years, so it is classified as a non-current asset. Long-term investments are also non-current assets since they’re not expected to be converted to cash within the short term. Inventories are indeed current assets, as they are typically sold or used within the operating cycle, but cash is the clearest example and is universally recognized as a current asset.