Which of the following would ordinarily be classified as current assets on the balance sheet?

• A. Goodwill
• B. Bonds Payable
• C. Accounts Receivable
• D. Land

Answer: (C)

Verified step by step guidance

1. Understand the definition of current assets: Current assets are resources expected to be converted into cash, sold, or consumed within one year or the operating cycle, whichever is longer. Examples include cash, accounts receivable, inventory, and short-term investments.
2. Analyze each item provided in the question to determine if it meets the criteria for a current asset: Goodwill, Bonds Payable, Accounts Receivable, and Land.
3. Evaluate 'Goodwill': Goodwill is an intangible asset that arises when a company acquires another business. It is not expected to be converted into cash within one year, so it is classified as a non-current asset.
4. Evaluate 'Bonds Payable': Bonds Payable represents a long-term liability, not an asset. It does not meet the definition of a current asset.
5. Evaluate 'Accounts Receivable': Accounts Receivable represents amounts owed to the company by customers for goods or services provided. It is expected to be collected within one year, so it qualifies as a current asset. Evaluate 'Land': Land is a long-term tangible asset and is not expected to be converted into cash within one year, so it is classified as a non-current asset.