Which of the following is classified as a current asset?

• A. Bonds Payable
• B. Equipment
• C. Current Portion of Long-Term Debt
• D. Accounts Receivable

Answer: (D)

Verified step by step guidance

1. Understand the definition of a current asset: A current asset is any asset that is expected to be converted into cash, sold, or consumed within one year or within the operating cycle of the business, whichever is longer.
2. Review the options provided: Bonds Payable, Equipment, Current Portion of Long-Term Debt, and Accounts Receivable.
3. Analyze each option: Bonds Payable is a liability, not an asset. Equipment is a non-current asset because it is used over a long period and not expected to be converted into cash within one year. The Current Portion of Long-Term Debt is a liability, not an asset.
4. Focus on Accounts Receivable: Accounts Receivable represents amounts owed to the company by customers for goods or services provided on credit. It is expected to be collected within one year, making it a current asset.
5. Conclude that Accounts Receivable is classified as a current asset based on its definition and characteristics.