tion 1 of 20
5.0 Points
A firm's __________ account is categorized as a current asset.
A. equipment
B. accounts payable
C. bonds payable
D. merchandise inventory
D
To find out which account is categorized as a current asset, we can look at the definition of current assets. Current assets are resources that are expected to be converted into cash or used up within one year. The options given are:
A. Equipment: Equipment is typically a long-term asset and is not expected to be converted into cash within one year. This option can be eliminated.
B. Accounts payable: Accounts payable is a liability, not an asset. This option can be eliminated.
C. Bonds payable: Bonds payable is also a liability, not an asset. This option can be eliminated.
D. Merchandise inventory: Inventory is an asset that a firm holds with the intention of selling it in the normal course of business. Since inventory is expected to be converted into cash within one year, it is categorized as a current asset. This option is correct.
Therefore, the correct answer is D. Merchandise inventory.