Current Assets & Examples

Current Assets are those assets that are bought by the company for a short duration and are expected to be converted into cash, consumed, or written off within one accounting year. They are also called short-term assets.

These short-term assets are typically called current assets by the accountants and have no long-term future in the business. Current assets may be held by a company for a duration of a complete accounting year, 12 months, or maybe less. A major reason for the conversion of current assets into cash within a very short amount of time is to pay off the current liabilities.

Examples

Some of the major examples of current assets are – cash in hand, cash at the bank, bills receivables, sundry debtors, prepaid expenses, stock or inventory, other liquid assets, etc.

• All of these assets are converted into cash within one accounting year.
• Liquid assets are a part of current assets. Although they are easier to be converted into cash than current assets.
• Current assets (along with current liabilities) help in the calculation of the current ratio. And they’re also referred to as circulating/floating assets.
• Current assets are shown on the balance sheet (on the asset side) under the heading, current assets.

Current assets on the balance sheet

Balance Sheet (for the year…)