Current Assets

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What are Current Assets? Meaning.


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 money, bank accounts)
  • Cash Equivalents (e.g., certificates of deposit)
  • Short-term Deposits
  • Marketable Securities (expected to be sold within 1 year, for example common stock, treasury bills, money market instruments)
  • Accounts Receivable (invoices sent to clients)
  • Work in Progress
  • Raw Materials
  • Finished Goods / Inventory (to be sold within 1 year)
  • Prepaid Insurance
  • Prepaid Expenses
  • Other liquid assets (e.g., 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

Initial Understanding of a Balance Sheet, Financial Statement Analysis, Accounting (...)
 
 
 
 

Compare with: Intangible Assets  |  Current Liabilities  |  Working Capital

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