Current and Noncurrent Assets
Current and Non-Current Assets
ACC/400
November 13, 2013
Current and Non-current Assets
Current assets are usually cash or other resources that can be converted into cash easily and used up or liquidated within one year of a company operating cycle. Current assets are considered short term and include cash on hand, cash in a bank account, current debts. Current assets are items listed on the balance sheet in the order of liquidity which include cash, temporary investments, accounts receivable, inventory and supplies. Any asset which is not easy to convert to cash or not expected to become cash within the next year is a noncurrent asset. Non-current assets are considered long term, fixed or stationery. Non-current assets encompass property that is immovable, production or plant units, equipment, and human resources. Non-current usually includes land, buildings, vehicles, furniture, and office property.
Non-current assets are assets whose current value can positively be accrued to the company at some time and indirectly generates income.
What differs between current and noncurrent assets?
The major difference between current and noncurrent assets is how quickly assets can be liquidated or sold for cash. Current assets can be sold, lent, or leased to generate income or value to a business. Current assets also are used for quick income generation when needed, and include cash on hand, cash in a bank account, current borrowers, accounts receivable, and short-term investments. Cash is a current short term asset because it can usually be used within one year of its stated amount as listed on the balance sheet. Another current asset is accounts receivable which includes cash that is owed to a company by customers for services rendered or products that have been purchased on credit. Noncurrent assets are called stationery, permanent or fixed. These assets are kept in a business for longer than a period of a year and are used
ACC/400
November 13, 2013
Current and Non-current Assets
Current assets are usually cash or other resources that can be converted into cash easily and used up or liquidated within one year of a company operating cycle. Current assets are considered short term and include cash on hand, cash in a bank account, current debts. Current assets are items listed on the balance sheet in the order of liquidity which include cash, temporary investments, accounts receivable, inventory and supplies. Any asset which is not easy to convert to cash or not expected to become cash within the next year is a noncurrent asset. Non-current assets are considered long term, fixed or stationery. Non-current assets encompass property that is immovable, production or plant units, equipment, and human resources. Non-current usually includes land, buildings, vehicles, furniture, and office property.
Non-current assets are assets whose current value can positively be accrued to the company at some time and indirectly generates income.
What differs between current and noncurrent assets?
The major difference between current and noncurrent assets is how quickly assets can be liquidated or sold for cash. Current assets can be sold, lent, or leased to generate income or value to a business. Current assets also are used for quick income generation when needed, and include cash on hand, cash in a bank account, current borrowers, accounts receivable, and short-term investments. Cash is a current short term asset because it can usually be used within one year of its stated amount as listed on the balance sheet. Another current asset is accounts receivable which includes cash that is owed to a company by customers for services rendered or products that have been purchased on credit. Noncurrent assets are called stationery, permanent or fixed. These assets are kept in a business for longer than a period of a year and are used
References: Kimmel, P.D., Weygandt, J.J., & Kieson, D.E. (2007). Financial Accounting: Tools for Business Decision Making (4th ed.). Retrieved from The University of Phoenix eBook Collection database.