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College Accounting (Book Only): A ...

13th Edition
Scott + 1 other
ISBN: 9781337280570

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BuyFindarrow_forward

College Accounting (Book Only): A ...

13th Edition
Scott + 1 other
ISBN: 9781337280570
Textbook Problem

Which of the following is not an example of a current asset?

  1. a. Cash
  2. b. Merchandising Inventory
  3. c. Prepaid Expenses
  4. d. Equipment
  5. e. Supplies

To determine

Find the correct option, the option that is not an example of current asset.

Explanation

Current assets: The assets which could be converted into cash within one year like accounts receivables, or marketable investments; or which could be used up within the completion of an operating cycle, like inventory, supplies and insurance, are referred to as current assets.

The current assets are listed on the balance sheet according to the order of liquidity, as shown below:

  • Cash and Cash Equivalents
  • Notes Receivable
  • Accounts Receivable
  • Merchandise Inventory
  • Supplies
  • Prepaid Insurance

Justification for correct answer: In the given options, except Equipment, all other are current assets...

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