What term refers to items of monetary value owned by a business that are not expected to be sold within the next twelve months?

What term refers to items of monetary value owned by a business that are not expected to be sold within the next twelve months?

• A. Current assets
• B. Fixed assets
• C. Intangible assets
• D. Liabilities

Answer: (B)

The key idea is dividing assets by time horizon. Assets owned by a business that aren’t expected to be sold within a year are non-current assets, used over many years. The most common term for the tangible assets a business uses in its operations for the long term is fixed assets. They include things like buildings, machinery, and vehicles and are typically shown on the balance sheet at cost less depreciation. Current assets, by contrast, are meant to be turned into cash within 12 months (like cash, inventory, and receivables). Liabilities are obligations, not assets. Intangible assets are long-term but refer to non-physical assets (like patents or goodwill); the phrasing here is pointing to the physical, long-term operational resources, which is why fixed assets is the best fit.

The key idea is dividing assets by time horizon. Assets owned by a business that aren’t expected to be sold within a year are non-current assets, used over many years. The most common term for the tangible assets a business uses in its operations for the long term is fixed assets. They include things like buildings, machinery, and vehicles and are typically shown on the balance sheet at cost less depreciation.

Current assets, by contrast, are meant to be turned into cash within 12 months (like cash, inventory, and receivables). Liabilities are obligations, not assets. Intangible assets are long-term but refer to non-physical assets (like patents or goodwill); the phrasing here is pointing to the physical, long-term operational resources, which is why fixed assets is the best fit.