Which item is not a current asset?

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Master the basics of accounting with the NOCTI Accounting Foundations Test. Prepare efficiently with flashcards and multiple choice questions complete with explanations. Ensure success in your exam!

Multiple Choice

Which item is not a current asset?

Explanation:
Current assets are resources a business expects to convert to cash or use up within one year or the operating cycle. Cash is already cash, accounts receivable will be collected in a short period, and inventory will be sold to generate cash within that short timeframe. Buildings, however, are long-term assets used in operations for many years. They’re not typically converted to cash within a year and are depreciated over their useful life, so they are classified as non-current (fixed) assets. This is why buildings are not a current asset.

Current assets are resources a business expects to convert to cash or use up within one year or the operating cycle. Cash is already cash, accounts receivable will be collected in a short period, and inventory will be sold to generate cash within that short timeframe. Buildings, however, are long-term assets used in operations for many years. They’re not typically converted to cash within a year and are depreciated over their useful life, so they are classified as non-current (fixed) assets. This is why buildings are not a current asset.

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