What describes current assets of a business?

Current assets are specifically defined as assets that a business expects to convert into cash or use up within one year or within its operating cycle, whichever is longer. This means that current assets typically include cash, accounts receivable, and inventory—items that are either cash or will be turned into cash in the short term.

The mention of items owned for less than one year aligns with this definition, as it emphasizes the short-term nature of current assets. While the term "one year" is important, it’s also crucial to consider the operating cycle in some contexts, as that cycle could vary depending on the nature of the business.

The other statements do not accurately describe current assets. For instance, assets that undergo depreciation, such as machinery or equipment, are usually classified as long-term assets, not current assets. Items that cannot be quickly converted to cash signify long-term or non-current assets, which typically involve a longer timeframe for liquidation. Likewise, items that provide long-term value would also fall into the category of long-term assets, as they are not meant to be converted to cash in the short term.

In summary, the defining characteristic of current assets is the expectation of conversion to cash within a year or the operating cycle, making the description of items owned