An Item That May Be Converted to Cash Within One

question 57

Multiple Choice

An item that may be converted to cash within one year or one operating cycle of the firm is classified as a

• A) current liability.
• B) long-term asset.
• C) current asset.
• D) None of the other answers are correct.

---

Definitions:

Current Liabilities

Obligations or debts a company is expected to pay within the next year.

Contributed Capital

The total value of money and other resources that shareholders have contributed to the company in exchange for shares of stock.

Faithful Representation

Requires that the information be complete, neutral, and free from error.