Multiple Choice
Which of the following is a weakness of the payback method in capital budgeting?
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1. Introduction to Accounting
Types of Accounting
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Which of the following is an example of a current asset?
A
Equipment
B
Land
C
Goodwill
D
Accounts Receivable
Verified step by step guidance1
Understand the definition of a current asset: Current assets are assets that are expected to be converted into cash, sold, or consumed within one year or within the operating cycle of the business, whichever is longer.
Review the options provided: Equipment, Land, Goodwill, and Accounts Receivable. Determine whether each item meets the criteria for a current asset.
Analyze Equipment: Equipment is classified as a non-current asset because it is used in operations and is not expected to be converted into cash within one year.
Analyze Land: Land is also classified as a non-current asset because it is held for long-term use and does not meet the criteria for a current asset.
Analyze Accounts Receivable: Accounts Receivable represents amounts owed to the business by customers for goods or services provided on credit. It is expected to be collected within one year, making it a current asset.
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