What is a non-current asset?

What is a non-current asset?

• A. An asset that cannot be converted to cash within the next year
• B. An asset that will be sold within the next quarter
• C. Cash held to meet daily expenses
• D. A liability due after more than one year

Answer: (A)

Non-current assets are long-term resources that a business expects to use for more than one year and are not readily converted into cash in the near term. They include items like land, buildings, equipment, and intangible assets, as well as long-term investments. This distinguishes them from current assets, which are expected to be converted to cash or used up within the next year. The correct description matches that idea: an asset that cannot be converted to cash within the next year. By contrast, assets that are sold or used up within a short period (like inventory) or cash kept for daily needs are current assets. A liability due after more than a year is a non-current liability, not an asset.

Non-current assets are long-term resources that a business expects to use for more than one year and are not readily converted into cash in the near term. They include items like land, buildings, equipment, and intangible assets, as well as long-term investments. This distinguishes them from current assets, which are expected to be converted to cash or used up within the next year.

The correct description matches that idea: an asset that cannot be converted to cash within the next year. By contrast, assets that are sold or used up within a short period (like inventory) or cash kept for daily needs are current assets. A liability due after more than a year is a non-current liability, not an asset.