Current Assets

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Description of Current Assets. Explanation.

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Definition Current Assets. Description.


Current Assets are cash and other assets which are expected to be converted to cash, consumed, or sold within 12 months of the balance sheet date, or the company's normal operating cycle, whichever is longer.


The Operating Cycle is the average time that is required to go from cash to cash in producing revenues. For example, an airplane manufacturer may have an operating cycle longer than a year because it takes more time to build an airplane (cash expenditures) and sell it (cash receipt). In such cases, the current versus non-current classification will be based on a period longer than a year after the balance sheet date.


Current assets are also called Liquid Assets or Short-term Assets.


List of Current Assets. Types

Current or liquid assets include items such as:

  • Cash
  • Cash Equivalents
  • Short-term Deposits
  • Marketable Securities
  • Accounts Receivable
  • Work in Progress
  • Raw Materials
  • Finished Goods / Inventory
  • Prepaid Insurance
  • Prepaid Expenses
  • Office Supplies

Current Assets are listed on the company's balance sheet.

The difference between current assets and current liabilities is called Working Capital.


Non-current Assets

Non-current assets include items such as:


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Introduction to the Balance Sheet

This video explains the main terms you need to read a balance sheet

Assets: things a company owns that have value.
- Current Assets: t...
Usage (application): Initial Understanding of a Balance Sheet, Financial Statement Analysis, Accounting
 
 

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