Current Assets

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DEFINITION of 'Current Assets'

1. A balance sheet account that represents the value of all assets that are reasonably expected to be converted into cash within one year in the normal course of business. Current assets include cash, accounts receivable, inventory, marketable securities, prepaid expenses and other liquid assets that can be readily converted to cash.

2. In personal finance, current assets are all assets that a person can readily convert to cash to pay outstanding debts and cover liabilities without having to sell fixed assets.

In the United Kingdom, current assets are also known as "current accounts."

INVESTOPEDIA EXPLAINS 'Current Assets'

1. Current assets are important to businesses because they are the assets that are used to fund day-to-day operations and pay ongoing expenses. Depending on the nature of the business, current assets can range from barrels of crude oil, to baked goods, to foreign currency.

2. In personal finance, current assets include cash on hand and in the bank, and marketable securities that are not tied up in long-term investments. In other words, current assets are anything of value that is highly liquid.

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RELATED FAQS
  1. What is the difference between current assets and fixed assets?

    Current assets, or short-term assets, are assets that can be converted into cash within one fiscal year or one operating ... Read Full Answer >>
  2. How do I calculate current liabilities in Excel?

    Current liabilities are debt obligations that are due within one year. Some examples of current liabilities that appear on ... Read Full Answer >>
  3. When are current assets converted to liquid assets?

    Current assets may be converted to liquid assets at any time, but by definition, they are expected to be either used up or ... Read Full Answer >>
  4. Are current assets liquid or capital?

    Current assets are considered liquid capital, while nonliquid, or illiquid, assets are usually grouped into other types of ... Read Full Answer >>
  5. What is the difference between a fixed asset and a current asset?

    Fixed assets are long-term, tangible assets such as land, equipment, buildings, furniture and vehicles. Fixed assets are ... Read Full Answer >>
  6. What is the difference between tangible and intangible assets?

    Tangible assets are physical assets such as land, vehicles, equipment, machinery, furniture, inventory, stock, bonds and ... Read Full Answer >>
  7. What happens if a company doesn't think it will collect on some of its receivables?

    The accounts receivable account, or receivables for short, is created when a company extends credit to a customer based on ... Read Full Answer >>
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