Certified Compensation Professional (CCP) 2025 – 400 Free Practice Questions to Pass the Accounting & Finance for the HR Professional Exam

Current assets are those assets that are expected to be converted into cash or used up within one year or within the operating cycle of the business, whichever is longer. Examples of current assets include cash, accounts receivable, and marketable securities, all of which are readily liquid and play a crucial role in meeting short-term financial obligations.

Inventory, however, is categorized as a current asset as long as it is expected to be sold or used up within a year. When inventory is held for more than a year, it does not meet the criteria of a current asset because it is not expected to be converted into cash or consumed in the near term. Therefore, inventory held for more than a year is classified as a long-term asset, illustrating why this choice accurately represents an asset that does not fall under the category of current assets.