A firm's __________ account is categorized as a current asset.

A. equipment
B. accounts payable
C. bonds payable
D. merchandise inventory

D

To determine the correct answer, we need to understand what a current asset is. Current assets are the assets that a company expects to convert into cash or use up within one year or the operating cycle, whichever is longer.

Now, let's analyze each option:

A. Equipment: Equipment is typically a long-term or non-current asset because its useful life is expected to exceed one year.

B. Accounts payable: Accounts payable is a liability, not an asset. It represents the amount owed by a company to its suppliers for goods or services purchased on credit.

C. Bonds payable: Bonds payable are long-term liabilities since they represent the amount a company borrows from investors, usually to finance long-term projects or operations.

D. Merchandise inventory: Merchandise inventory consists of goods held by a company for sale in the normal course of business. Since companies typically intend to sell their inventory within one year, merchandise inventory is classified as a current asset.

Based on this analysis, the correct answer to the question is D. merchandise inventory.