Current Assets

What are Current Assets (Definition)

• Current Assets are resources a business expects to convert into Cash, sell, or use within one year ( or within the company’s operating cycle, whichever is longer).

• They represent the company’s short-term liquidity and ability to pay debts due soon.

What Are the Categories of ALL Common Current Assets?

A full consolidated list of all common current assets is:

• Cash and Cash Equivalents

• Receivables

• Inventory

• Prepaid expenses

• Short-term Investments

• Other Current Assets

What are examples of Cash & Cash Equivalents? (Current Assets)

• Cash on hand

• Bank accounts

• Certificates of deposit (short-term)

• Commercial Paper

• Petty cash

• Money market funds

• Treasury bills

What are examples of Receivables? (Current Assets)

• Accounts receivable

• Trade receivables

• Interest receivable

• Rent receivable

• Employee receivables

• Notes receivable (current portion)

What are examples of Inventory? (Current Assets)

• Raw materials

• Finished goods

• Supplies

• Work-in-progress

• Merchandise inventory

What are examples of Prepaid Expenses? (Current Assets)

• Prepaid Rent

• Prepaid Insurance

• Prepaid Taxes

• Prepaid Utilities

• Prepaid Maintenance

• Prepaid services

What are examples of Short-Term Investments? (Current Assets)

• Equity investments (short-term)

• Bonds held for trading

• Marketable securities

What are examples of ‘Other Current Assets’?

• Advance payments to suppliers (expected within a year)

• Short-term deposits

• Current portion of long-term assets (e.g., current portion of loans receivable)

• GST/VAT receivable

Summary of Current Assets

• Current Assets = Cash + Receivables + Inventory + Prepaid Expenses + Short-Term Investments + Other short - term assets.

• They are the most liquid assets on a company’s balance sheet.