Question 1 Report
Examples of current assets are
Current assets are resources a business expects to convert into cash, sell, or use up within a normal trading period, usually one year. They are separated from current liabilities, which are amounts the business owes and must pay out in the near future.
Cash is the most liquid current asset of all, and trade debtors are customers who owe the business money for goods bought on credit, which the business expects to collect as cash soon. Both of these belong on the assets side of the balance sheet, so cash and trade debtors together are correctly classified as current assets.
Trade creditors are suppliers the business owes money to, so they are a current liability, not an asset; any option that mixes trade creditors in with cash or trade debtors incorrectly combines an asset with a liability. That rules out grouping trade debtors, trade creditors and cash together, cash and trade creditors together, or trade creditors and trade debtors together.
A reliable check for this kind of question is to ask whether the business is owed money or owes money: debtors and cash are owed to or held by the business, so they are assets, while creditors are owed to others, so they are liabilities.
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