Canadian Securities Course (CSC) Level 1 Practice Exam

Which of the following is an example of a non-current asset?

1. Trade receivables

2. Inventory

3. Property

4. Accounts payable

The correct answer is: Property

A non-current asset is an economic resource that is expected to provide benefits over a long period, typically longer than one year, and is not intended for sale in the normal course of business operations. Property is an example of a non-current asset because it is a tangible fixed asset that a company uses to generate revenue over an extended timeframe. This includes real estate, buildings, and land, which are not quickly converted into cash and serve long-term purposes in the operations of a business. In contrast, trade receivables and inventory are categorized as current assets, as they are expected to be converted into cash or consumed within one year. Accounts payable, on the other hand, represents a current liability, indicating money the company owes to suppliers or creditors, thus not fitting into the asset classification at all. Understanding these classifications is crucial for analyzing a company’s financial position, as it reflects how a firm's assets are structured and how they contribute to long-term operational stability.