Question

Current assets include

• A. Furniture
• B. Investment
• C. Goodwill
• D. Debtors

Hint:

Debtors are part of current assets as they can be converted into cash quickly — unlike furniture or goodwill, which are fixed assets.

Answer 1

The Correct Option is D

Step 1: Understanding current assets.
Current assets are short-term assets that can be easily converted into cash within one year.
They are used in day-to-day operations and help maintain liquidity in a business.
Examples include cash, debtors, bills receivable, and stock.
Step 2: Role of debtors.
Debtors are individuals or firms who owe money to the business after purchasing goods or services on credit.
Since this amount is expected to be received soon, it is treated as a current asset.
Step 3: Comparison with other options.
- Furniture: Considered a fixed asset as it has long-term utility.
- Investment: May be current or non-current, but generally long-term in nature.
- Goodwill: An intangible fixed asset, not a current one.
- Debtors: Represent short-term receivables, hence a current asset.
Step 4: Importance of debtors as current assets.
Debtors contribute to a firm’s liquidity position and form a vital part of working capital management.
Efficient management of debtors ensures timely inflows and stable cash cycles.
Step 5: Conclusion.
Therefore, among the given options, Debtors are classified as current assets.