Canadian Securities Course (CSC) Level 1 Practice Exam

What are current assets? Give examples.

1. Assets with a long-term value, such as property.

2. Debts that are due for repayment within a year.

3. Assets that will be realized, consumed, or sold within a year.

4. Investments in associates.

The correct answer is: Assets that will be realized, consumed, or sold within a year.

Current assets are assets that are expected to be realized, consumed, or sold within a year or within the normal operating cycle of a business, whichever is longer. These assets are generally liquid and can be easily converted into cash. Examples of current assets include cash and cash equivalents, accounts receivable, inventory, and short-term investments. Option A is incorrect because assets with a long-term value, such as property, are considered non-current assets. Option B is incorrect because debts that are due for repayment within a year are liabilities, not current assets. Option D is incorrect because investments in associates are typically classified as long-term investments, not current assets.