Which item is NOT a current asset?

Which item is NOT a current asset?

• A. Cash
• B. Accounts Receivable
• C. Equipment
• D. Marketable Securities

Answer: (C)

Current assets are resources expected to be converted to cash or used up within one year (or the operating cycle). Cash, accounts receivable, and marketable securities all meet this, as they are liquid or will be converted to cash within a short period. Equipment, however, is a fixed asset used in operations over many years and is recorded under property, plant, and equipment; it’s not typically converted to cash within a year and is depreciated over its useful life. Therefore, equipment is not a current asset.

Current assets are resources expected to be converted to cash or used up within one year (or the operating cycle). Cash, accounts receivable, and marketable securities all meet this, as they are liquid or will be converted to cash within a short period. Equipment, however, is a fixed asset used in operations over many years and is recorded under property, plant, and equipment; it’s not typically converted to cash within a year and is depreciated over its useful life. Therefore, equipment is not a current asset.