Current and Noncurrent assets
Current and noncurrent assets There are two main categories that assets can fall in, and those are current assets and noncurrent assets. Assets are valuables such as cash, inventory, trademarks, and property. Current and noncurrent assets differ from one another in several ways. The main difference among current assets and noncurrent assets is the time it takes for them to liquidate when needed. The order of liquidity is presented on the balance sheet in the order of the amount of time it takes to convert each one into cash, from least to greatest. Cash and cash equivalents are the first current assets that are listed on the balance sheet, followed by the remaining current assets, and finished with noncurrent assets. Current and noncurrent assets are equally as important.
Current assets Current assets are one of two main types of assets. Companies use current assets as a source of funding for daily procedures. A current asset is something of value that the company plans to convert into cash within one business year. These assets are important to companies because they help to pay ongoing expenses that the company incurs. Examples of current assets include cash, cash equivalents, prepaid expenses, short-term investments, inventory, and accounts receivable (Kimmel, Weygandt, & Kieso, 2007). Cash equivalents are a very important current asset because they are readily convertible to cash and close to their maturity date so that their market value cannot change. Personal current assets are somewhat similar. These assets are the amount of cash on hand, amount of cash in the bank, and some short-term securities (Investopedia, 2014). Current assets are extremely valuable to a business and an individual with personal assets.
Noncurrent assets Noncurrent assets are the second of the two main types of assets. Noncurrent assets are a company’s long-term investments that will need longer than one business year to reach its full value. Brand
Current assets Current assets are one of two main types of assets. Companies use current assets as a source of funding for daily procedures. A current asset is something of value that the company plans to convert into cash within one business year. These assets are important to companies because they help to pay ongoing expenses that the company incurs. Examples of current assets include cash, cash equivalents, prepaid expenses, short-term investments, inventory, and accounts receivable (Kimmel, Weygandt, & Kieso, 2007). Cash equivalents are a very important current asset because they are readily convertible to cash and close to their maturity date so that their market value cannot change. Personal current assets are somewhat similar. These assets are the amount of cash on hand, amount of cash in the bank, and some short-term securities (Investopedia, 2014). Current assets are extremely valuable to a business and an individual with personal assets.
Noncurrent assets Noncurrent assets are the second of the two main types of assets. Noncurrent assets are a company’s long-term investments that will need longer than one business year to reach its full value. Brand
References: Investopedia. (2014). Current Assets. Retrieved from http://www.investopedia.com/terms/c/- currentassets.asp Kimmel, P. D., Weygandt, J. J., & Kieso, D. E. (2007). Financial Accounting: Tools for Business Decision Making (4th ed.). Retrieved from The University of Phoenix eBook Collection database. Ready Ratios. (2011-2014). Non-current assets. Retrieved from http://www.readyratios.com- /reference/accounting/non_current_assets.html