CSEET · Fundamentals of Accounting · Preparation of Final Accounts for Sole Proprietorship
Which of the following is classified as a current asset in the balance sheet of a trading firm?
Goods held for resale are a current asset because they are meant to be sold and turned into cash within the normal operating cycle. Furniture and land are fixed tangible assets, and patent rights are intangible fixed assets, so none of them is current.
- AFurniture used in the office
- BGoods held for resaleCorrect
- CLand purchased for building a godown
- DPatent rights
Explanation
Stock-in-trade (goods held for resale) is expected to be converted into cash within the operating cycle, so it is a current asset. Furniture and land are fixed tangible assets, and patents are intangible fixed assets.
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