Which of the following best describes the term 'current assets'?

'Current assets' are typically defined as assets that are expected to be converted into cash or consumed within a year, making liquidity a key characteristic of this category. This classification includes items such as cash, accounts receivable, inventory, and other short-term investments. These assets play a vital role in determining a company's short-term financial health, as they are readily available to meet ongoing operational expenses and obligations.

In contrast, the other options describe situations that do not align with the standard definition of current assets. For instance, assets that are expected to be liquidated in over five years relate more to long-term assets, which are not intended for immediate conversion into cash. Similarly, long-term investments refer to assets that a company intends to hold for more than a year to generate returns, instead of the quicker turnaround associated with current assets. Finally, the description that includes only physical goods overlooks non-physical current assets such as accounts receivable or cash equivalents, which are indeed considered current assets. Therefore, the defining feature of current assets is their capacity to be readily converted into cash within a one-year timeframe.