Which item would typically be classified as a non-current asset?

Which item would typically be classified as a non-current asset?

• A. Buildings or long-term equipment
• B. Cash in hand
• C. Inventory
• D. Accounts receivable due within 12 months

Answer: (A)

Non-current assets are resources a business holds for longer than a year to support operations, not for quick sale. Buildings or long-term equipment fit this category because they are used over many years and are depreciated over their useful lives. They remain on the balance sheet as long‑term assets rather than being treated as cash or items slated for quick sale. Cash in hand is a current asset since it’s ready money for day-to-day needs. Inventory is also a current asset because it’s intended to be sold within the normal operating cycle. Accounts receivable due within 12 months is money owed by customers expected to be collected within a year, making it a current asset. Therefore, the item that would typically be classified as a non-current asset is buildings or long-term equipment.

Non-current assets are resources a business holds for longer than a year to support operations, not for quick sale. Buildings or long-term equipment fit this category because they are used over many years and are depreciated over their useful lives. They remain on the balance sheet as long‑term assets rather than being treated as cash or items slated for quick sale. Cash in hand is a current asset since it’s ready money for day-to-day needs. Inventory is also a current asset because it’s intended to be sold within the normal operating cycle. Accounts receivable due within 12 months is money owed by customers expected to be collected within a year, making it a current asset. Therefore, the item that would typically be classified as a non-current asset is buildings or long-term equipment.