Question

question 21

current or short-term assets are those which can be liquidated in less than 12 months.

Explanation:

🆕 New Concept Discovered: Asset Classification
Categorizing assets by liquidity and time horizon.

Step 1: Analyze the Definition

The statement describes assets that "can be liquidated in less than 12 months."

• Liquidation means converting an asset into cash.
• 12 months (one year) is the standard accounting threshold used to distinguish between short-term and long-term financial items.

Step 2: Identify the Accounting Terms

In financial accounting, assets expected to be converted into cash, sold, or consumed within one year (or the operating cycle, whichever is longer) are classified as:

1. Current assets (the most common formal balance sheet term).
2. Short-term assets (an equivalent term describing their time horizon).

Both terms correctly fill the blanks to complete the definition.

Answer:

Current or Short-term