The Classification of Assets into Current or Non-Current in the Balance

question 51

Multiple Choice

The classification of assets into current or non-current in the balance sheet will provide useful information on the short-term solvency of the entity:

• A) When the entity supplies goods or services within a clearly identifiable normal operating cycle.
• B) When the operating cycle of the entity is greater than 12 months.
• C) When the operating cycle of the entity is less than 12 months.
• D) When the entity is a financial institution.
• E) None of the given answers.

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Definitions:

Investment

The allocation of resources, such as capital or time, in the expectation of generating an income or profit.

Investment Options

Various vehicles through which individuals and entities can invest their money, potentially including stocks, bonds, real estate, mutual funds, and more.

Present Value

The current equivalent of a future sum of money or cash flow series, using a set rate of return for calculation.

Annual Payments

Regular payments made once a year, often associated with loans, annuities, or insurance policies, to settle obligations or distribute income.