Which items are typically classified as current assets?

• A. Cash and equivalents
• B. Accounts payable
• C. Inventory
• D. All of the above

Answer: (D)

Current assets are resources the company expects to convert to cash or use up within a year (or the operating cycle, if longer). Cash and equivalents are the most liquid, so they clearly belong here. Inventory also fits, since it’s held for sale in the near term. Accounts payable, however, is a current liability—the obligation to pay suppliers—not an asset. Because one item is a liability, the list containing all items isn’t correct. The items that are truly current assets are cash and equivalents and inventory.