Current assets are assets expected to be converted to cash within one year. Which of the following is not a current asset?

Current assets are assets expected to be converted to cash within one year. Which of the following is not a current asset?

• A. Accounts Receivable
• B. Inventory
• C. Land
• D. Cash

Answer: (C)

Current assets are those expected to be converted to cash or used up within one year (or the operating cycle, if longer). Cash is already cash, accounts receivable will be collected, and inventory will be sold for cash within that period, so these are current assets. Land, on the other hand, is a long-term asset kept for ongoing use in the business and not typically sold or converted to cash within a year. Because of that long-term nature, land is classified as a noncurrent (long-term) asset. So the item that is not a current asset is land.

Current assets are those expected to be converted to cash or used up within one year (or the operating cycle, if longer). Cash is already cash, accounts receivable will be collected, and inventory will be sold for cash within that period, so these are current assets. Land, on the other hand, is a long-term asset kept for ongoing use in the business and not typically sold or converted to cash within a year. Because of that long-term nature, land is classified as a noncurrent (long-term) asset. So the item that is not a current asset is land.