Which statement correctly distinguishes current assets from noncurrent assets?

• A. Noncurrent assets are expected to be converted to cash within one year.
• B. Current items are expected to be converted to cash or settled within one year (or operating cycle).
• C. Current liabilities are assets normally paid with long-term funds.
• D. Noncurrent liabilities are settled within one year.

Answer: (B)

Current assets are resources the company expects to convert to cash or use up in its normal operating cycle, typically within one year (or the operating cycle, if longer). This timing distinguishes them from noncurrent assets, which provide benefits beyond that period, such as property, plants, equipment, and long-term investments. The statement that current items are expected to be converted to cash or settled within one year (or the operating cycle) captures this timing difference precisely. The other statements don’t address the asset timing distinction—they relate to liabilities or reverse the idea of what qualifies as current versus noncurrent assets.