Current Assets Are Assets Expected to Be Converted to Cash

question 47

Multiple Choice

Current assets are assets expected to be converted to cash, sold, or consumed:

• A)within the next 12 months or within the business's normal operating cycle if less than a year.
• B)within the next 24 months.
• C)within the next 6 months.
• D)within the next 12 months or within the business's normal operating cycle if longer than a year.

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Definitions:

Sole Supplier

A single source from which a company purchases goods or services, often leading to increased negotiation power for the supplier but potential risks for the buyer.

Cash Conversion Cycle

A metric that measures the time span between a company's outlay of capital for supplies and receiving payment from the sale of those goods or services.

Accounts Receivable

Money owed to a business by its clients or customers for goods or services provided on credit.

Inventory Conversion Period

The average time it takes for a company to turn its inventory into sales.