A Current Asset Is Best Defined As

question 43

Multiple Choice

A current asset is best defined as:

• A)the market value of all assets currently owned by the firm.
• B)an asset the firm expects to purchase within the next year.
• C)the amount of cash on hand the firm currently shows on its balance sheet.
• D)cash and other assets owned by the firm that will convert to cash within the next year.
• E)the value of fixed assets the firm expects to sell within the next year.

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Definitions:

Prepaid Insurance

An asset account that represents insurance payments made in advance for future coverage periods.

Insurance Premium

The amount of money an individual or business must pay for an insurance policy, which provides financial protection or reimbursement against losses.

Adjusting Entry

Log entries drafted at the final phase of a financial period to attribute income and expenses to the period in which they were truly incurred.

Reversing Entries

Entries recorded at the start of a new accounting cycle to negate or reverse adjustments that were documented at the conclusion of the preceding period.