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Pick up the correct answer from the given choices(only one correct answer):
Q. Stock is
- a)included in the category of fixed assets
- b)an investment.
- c)a part of current assets
- d)an intangible fixed asset.
Correct answer is option 'C'. Can you explain this answer?
Verified Answer
Pick up the correct answer from the given choices(only one correct ans...
Stock (or inventory) refers to the goods and materials that a business holds for the purpose of resale. It is considered a current asset because it is expected to be sold or used up within one year as part of the normal operating cycle of the business.
- A: included in the category of fixed assets: This is incorrect. Fixed assets are long-term assets used in the operation of a business, while stock is a current asset.
- B: an investment: This is misleading. While stock may be an investment for some companies (e.g., investing in raw materials), in the context of business operations, it is primarily categorized as an asset, specifically a current asset.
- C: a part of current assets: This is correct. Stock is classified as a current asset on the balance sheet.
- D: an intangible fixed asset: This is incorrect. Stock is tangible and is not classified as an intangible asset.
Therefore, the accurate classification of stock is C.
Most Upvoted Answer
Pick up the correct answer from the given choices(only one correct ans...
Explanation:
Stock refers to the goods or inventory that a company holds for sale to customers. It is an important component of a company's current assets since it is expected to be sold off within a year.
The correct answer is option 'C', which states that stock is a part of current assets.
Let's understand why stock is a part of current assets in detail:
Current Assets:
Current assets are those assets that are expected to be converted into cash within a year or the operating cycle of the business, whichever is longer. These assets are used to support the day-to-day operations of the business. Examples of current assets include cash, accounts receivable, inventory, prepaid expenses, and short-term investments.
Stock as a part of Current Assets:
Inventory or stock represents the goods or products that a company holds for sale to customers. It is considered a part of current assets because it is expected to be sold off within a year. The value of inventory is recorded on the balance sheet under the heading of current assets.
Importance of Stock:
Stock is an important component of a company's assets as it represents the company's ability to generate revenue. A company that has a good inventory management system in place can ensure that it has enough stock to meet customer demand while minimizing the costs associated with holding excess inventory.
Conclusion:
To summarize, stock is a part of current assets because it represents the goods that a company holds for sale to customers and is expected to be sold off within a year. It is an important component of a company's assets as it represents the company's ability to generate revenue.
Stock refers to the goods or inventory that a company holds for sale to customers. It is an important component of a company's current assets since it is expected to be sold off within a year.
The correct answer is option 'C', which states that stock is a part of current assets.
Let's understand why stock is a part of current assets in detail:
Current Assets:
Current assets are those assets that are expected to be converted into cash within a year or the operating cycle of the business, whichever is longer. These assets are used to support the day-to-day operations of the business. Examples of current assets include cash, accounts receivable, inventory, prepaid expenses, and short-term investments.
Stock as a part of Current Assets:
Inventory or stock represents the goods or products that a company holds for sale to customers. It is considered a part of current assets because it is expected to be sold off within a year. The value of inventory is recorded on the balance sheet under the heading of current assets.
Importance of Stock:
Stock is an important component of a company's assets as it represents the company's ability to generate revenue. A company that has a good inventory management system in place can ensure that it has enough stock to meet customer demand while minimizing the costs associated with holding excess inventory.
Conclusion:
To summarize, stock is a part of current assets because it represents the goods that a company holds for sale to customers and is expected to be sold off within a year. It is an important component of a company's assets as it represents the company's ability to generate revenue.
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Community Answer
Pick up the correct answer from the given choices(only one correct ans...
'Stock'(also called Inventory) is included in Current assets because it can be converted into cash and cash equivalent within a period of one accounting year.
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Pick up the correct answer from the given choices(only one correct answer):Q. Stock isa)included in the category of fixed assetsb)an investment.c)a part of current assetsd)an intangible fixed asset.Correct answer is option 'C'. Can you explain this answer?
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