Current assets, or short-term assets, are assets that can be converted into cash within one fiscal year or one operating cycle. Current assets are used to facilitate day-to-day operational expenses and investments. Short-term assets are liquid; that is, they can be readily converted into cash. They are listed on a company's balance sheet in order of liquidity. Some examples of current assets listed on the balance sheet are cash, accounts receivables, inventory, short-term investments and prepaid expenses.

Fixed assets, also known as non-current or long-term assets, are tangible assets that a company owns and uses in its production of goods and services. Fixed assets are often listed on the balance sheet as "plant, property and equipment," which must have a useful life greater than one fiscal year or one operating cycle. Fixed assets generally include buildings, real estate, office equipment, manufacturing equipment and furniture. They generally undergo depreciation, which divides a company's cost for non-current assets to expense them over their useful lives. The depreciation aspect helps to avoid a big loss when a company is in its early stages or when it is expanding.

There are several differences between fixed assets and current assets. Unlike current assets, fixed assets usually undergo depreciation. Contrary to current assets, non-current assets are not used for day-to-day operations and cannot be liquidated readily to cash to meet short-term operational expenses or investments. Fixed assets have a useful life of over 12 months or one operating cycle of a company, while current assets are expected to be liquidated within one fiscal year or one operating cycle.

  1. What is the difference between current and noncurrent assets?

    Learn about current assets and noncurrent assets, the differences between these types of assets, and some examples of current ... Read Answer >>
  2. The difference between fixed and current assets

    Learn the differences between fixed assets such as land and current assets such as cash, and how these types of assets appear ... Read Answer >>
  3. Which financial statement can I find noncurrent assets on?

    Find out more about noncurrent assets, the three main types of noncurrent assets and which financial statement includes noncurrent ... Read Answer >>
  4. What is the difference between noncurrent assets and noncurrent liabilities?

    Find out more about noncurrent assets and noncurrent liabilities, some examples of noncurrent assets and liabilities and ... Read Answer >>
  5. What is the difference between a fixed asset and a current asset?

    Discover the difference between fixed assets and current assets and the value of each to a company. Learn the category and ... Read Answer >>
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