Which of the following best describes current assets?

Current assets are defined as assets that are anticipated to be converted into cash or used up within one year from the date of the balance sheet. This classification is significant because it helps assess a company’s liquidity, or its ability to meet short-term obligations. Common examples of current assets include cash, accounts receivable, and inventory.

Understanding the nature of current assets is crucial for evaluating the financial health of a business, particularly in the funeral service industry, where cash flow management is essential for operations and meeting obligations, such as vendor payments or staff compensation.

The other options do not accurately define current assets. Fixed and tangible assets typically refer to long-term assets that are not easily converted to cash, assets that provide long-term benefits further imply a lack of immediacy in their liquidity, and non-liquid assets fundamentally describe items that cannot be quickly converted into cash, which is contrary to the nature of current assets.