Utah General Contractors - Business and Law Practice Exam

Which of the following is NOT considered a current asset?

1. Inventory

2. Accounts Receivable

3. Land

4. Cash

The correct answer is: Land

Current assets are resources that a company expects to convert to cash or use up within one year or within its operating cycle, whichever is longer. Inventory represents goods available for sale, accounts receivable represents money owed to a company for goods or services sold, and cash is the most liquid asset that can be used for immediate expenses. All three of these options are indeed current assets because they are expected to be liquidated or consumed in the short term. On the other hand, land is classified as a long-term asset or non-current asset. It is not expected to be converted to cash or consumed in the near term, making it a stable investment for a company over a longer duration. This classification is critical for financial reporting and analysis, as it impacts a company's liquidity ratios and overall financial health. Therefore, land does not fall under the category of current assets, which is why this choice is accurate.