What are current assets?

Current assets are defined as assets that are expected to be converted into cash, sold, or consumed within one year or one operating cycle, whichever is longer. This includes items such as cash, accounts receivable, inventory, and short-term investments. The classification of current assets is critical for assessing a company's liquidity, as they provide insight into the resources readily available to meet short-term obligations.

In contrast, assets valued over a five-year period would typically be considered long-term assets, not current. Furthermore, assets that are not yet usable or sellable are not classified as current assets, as they must be readily available for use or conversion into cash. Lastly, assets purchased but not yet paid for may represent accounts payable or liabilities rather than assets, as they do not reflect resources owned by the company until payment is made. Thus, the defining feature of current assets is their liquidity within a one-year timeframe, making the first option the correct choice.