In a classified balance sheet, inventory is generally classified as which of the following?

• A. Intangible asset
• B. Current asset
• C. Current liability
• D. Long-term investment

Answer: (B)

Verified step by step guidance

1. Understand the classification of assets and liabilities on a classified balance sheet. Assets are typically divided into current assets, long-term investments, property, plant and equipment, intangible assets, and other categories.
2. Recall that current assets are assets expected to be converted into cash, sold, or consumed within one year or the operating cycle, whichever is longer.
3. Recognize that inventory consists of goods held for sale in the ordinary course of business, which are expected to be sold within the operating cycle.
4. Since inventory is expected to be sold and converted into cash within the operating cycle, it fits the definition of a current asset.
5. Therefore, on a classified balance sheet, inventory is classified as a current asset, not as an intangible asset, current liability, or long-term investment.