- CFA Exams
- CFA Level I Exam
- Study Session 7. Financial Reporting and Analysis (2)
- Reading 22. Understanding Balance Sheets
- Subject 1. Components and Format of the Balance Sheet
CFA Practice Question
A long-term asset is different from a prepaid expense primarily because a long-term asset ______
A. has physical substance.
B. is long-term in nature.
C. is used in operations and not for resale.
Explanation: This is the most correct statement. The primary difference between long-term assets and current assets in general is their useful lives.
User Contributed Comments 6
| User | Comment |
|---|---|
| murli | Between Long term Assets & Current Assets, the main difference the time, than the use. |
| danlan | Question is difference between long-term asset and prepaid expense. |
| steved333 | prepaid expenses are current assets. |
| endurance | thanks steved333 - Very good point to remember |
| gill15 | Another question compared long term assets to investements. Difference there was that long term assets is used in operations and not for resale. |
| Inaganti6 | @gill15 exactly. my memory lead me to choosing C. ugh. |