Which account would typically not be classified as a current asset?

Which account would typically not be classified as a current asset?

• A. Cash
• B. Inventory
• C. Accounts Receivable
• D. Property, Plant, and Equipment

Answer: (D)

A property, plant, and equipment account would not be classified as a current asset because it consists of long-term tangible assets that a company uses in its operations to generate revenue over multiple periods. These assets, such as buildings, machinery, and vehicles, are expected to remain in use for longer than one year and are not intended for sale in the ordinary course of business. In contrast, current assets are resources that are expected to be converted into cash, sold, or consumed within one year or one operating cycle, whichever is longer. Cash, inventory, and accounts receivable all fit within this classification. Cash is readily available for use, inventory is held for sale in the normal business cycle, and accounts receivable represent amounts owed to the business that are expected to be collected in the near term. Thus, property, plant, and equipment stands apart as a long-term investment, emphasizing its classification outside of current assets.

A property, plant, and equipment account would not be classified as a current asset because it consists of long-term tangible assets that a company uses in its operations to generate revenue over multiple periods. These assets, such as buildings, machinery, and vehicles, are expected to remain in use for longer than one year and are not intended for sale in the ordinary course of business.

In contrast, current assets are resources that are expected to be converted into cash, sold, or consumed within one year or one operating cycle, whichever is longer. Cash, inventory, and accounts receivable all fit within this classification. Cash is readily available for use, inventory is held for sale in the normal business cycle, and accounts receivable represent amounts owed to the business that are expected to be collected in the near term. Thus, property, plant, and equipment stands apart as a long-term investment, emphasizing its classification outside of current assets.