What are Current Assets?
Current assets are assets that show the liquidity and operational efficiency of a business. Current assets are listed on a company’s balance sheet after its cash and cash equivalents.
Having sufficient current assets is crucial for a company to fund its daily activities and to prepare for unforeseen costs. A company with a robust current asset position has a higher chance of fulfilling its immediate financial responsibilities.
What are Asset Accounts in accounting?
What are examples of Common Assets?
Here are some of the most common examples of current assets:
Cash and cash equivalents: This includes cash on hand, money in checking and savings accounts, and short-term investments that can be easily converted into cash.
Accounts receivable: This is money owed to the company by its customers for goods or services that have been delivered or rendered.
Inventory: This is the value of the goods that a company has on hand that are ready to be sold.
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Prepaid expenses: This is the amount the company has paid in advance for goods or services it has not yet received.
Short-term investments: This includes investments that the company expects to sell within one year.