Utah General Contractors - Business and Law Practice Exam

The correct answer is current assets. Current assets are defined as assets that are expected to be converted into cash or used up within one year or within the operating cycle of the business, whichever is longer. The elements listed in the question—cash, accounts receivable, inventory, notes receivable, and prepaid expenses—are all examples of resources that fit this definition.

Cash is the most liquid asset and can be readily used for transactions. Accounts receivable represent money owed to a company by customers for products or services already provided, and they are expected to be collected within a short period. Inventory consists of goods available for sale and is assumed to be converted into cash through sales. Notes receivable are written promises that a customer will pay a specified amount in the future, typically within one year. Prepaid expenses are payments made in advance for goods or services that will be received in the future and are expected to be consumed within the operational cycle.

In contrast, fixed assets, such as property, plant, and equipment, are long-term assets that are not easily converted to cash within a year. Intangible assets, like patents or trademarks, do not have physical substance and are also typically long-term. Deferred assets refer specifically to expenses that have been paid in