Utah Contractor Practice Exam 2025 - Free Contractor License Practice Questions and Study Guide

Question: 1 / 770

__________ are all assets that a person can readily convert to cash to pay outstanding debts and cover liabilities without having to sell fixed assets.

Current assets

Current assets refer specifically to those assets that can easily and quickly be converted into cash within a year. This category includes cash itself, accounts receivable, inventory, and other short-term investments, making these assets crucial for managing immediate financial obligations, such as paying off debts and covering liabilities.

In contrast, fixed assets are long-term resources (like buildings, machinery, and land) that are not intended to be liquidated in the short term. Liabilities represent obligations or debts that a company owes, and "none of the above" does not accurately describe any assets. Understanding the distinction between these asset types is essential for effective financial management, particularly when assessing liquidity and the ability to meet financial commitments in a timely manner.

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Fixed assets

Liabilities

None of the above

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