Which account is typically classified as a current asset on the balance sheet?

Which account is typically classified as a current asset on the balance sheet?

• A. Accounts receivable
• B. Buildings
• C. Land
• D. Long-term investments

Answer: (A)

Current assets are resources a company expects to convert into cash or use up within one year (or the operating cycle). Accounts receivable fits this because it represents money owed by customers for sales already made and is usually collected in the short term, making it a current asset. Buildings and land are long-term assets (they provide benefits over many years), not expected to be turned into cash within a year. Long-term investments are not current because they’re intended to be held for more than a year. So, accounts receivable is the typical current asset.

Current assets are resources a company expects to convert into cash or use up within one year (or the operating cycle). Accounts receivable fits this because it represents money owed by customers for sales already made and is usually collected in the short term, making it a current asset. Buildings and land are long-term assets (they provide benefits over many years), not expected to be turned into cash within a year. Long-term investments are not current because they’re intended to be held for more than a year. So, accounts receivable is the typical current asset.