The basis for classifying assets as current or noncurrent is the period of time normally required by the accounting entity to convert cash invested in Select one: a. inventory back into cash, or 12 months, whichever is shorter. b. tangible fixed assets back into cash, or 12 months, whichever is longer. c. inventory back into cash, or 12 months, whichever is longer. d. receivables back into cash, or 12 months, whichever is longer.

Question

Jeramiah

Business

17 December, 17:29

The basis for classifying assets as current or noncurrent is the period of time normally required by the accounting entity to convert cash invested in Select one: a. inventory back into cash, or 12 months, whichever is shorter. b. tangible fixed assets back into cash, or 12 months, whichever is longer. c. inventory back into cash, or 12 months, whichever is longer. d. receivables back into cash, or 12 months, whichever is longer.

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Answers (1)

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Robert Herman · Answer 1

C) inventory back into cash, or 12 months, whichever is longer.

Explanation:

Inventories that can be converted into cash within a 12 month period are considered current assets. If it takes longer than 12 months to convert them to cash then they are considered noncurrent assets.

As a general rule, all current assets can be liquidated (converted to cash) within a 12 month period. It takes more than 12 months to liquidate noncurrent assets.