WHAT IS A CURRENT ASSET?

Define Current Asset?

Current Asset are assets that can be converted into cash within a year.

What is Current Asset in more detail?

Current Asset are items that can be sold and converted into cash within one year. Examples of current assets are current stocks that you have, short term investments like short term deposit accounts, and yes of course cash and what’s in your current bank account.

I have a mutual fund that can be converted into cash if ever I wanted it too but my goal is to not touch it until I retire. For emergencies, it is important to have a cash that can be easily accessible in your current bank account. For times like emergencies, it is better to have an emergency fund which is cash to be easily accessed.

Current Assets can be classified into two. Current and non-current or other assets.

Other typical examples of current assets are short-term prepayments, inventories, short-term notes receivable, accounts receivable and short-term investments.

Current Assets are anything that is highly liquid which is cash that you can use to pay for your debts and liabilities without using your fixed assets..

Everyday I am always using current asset which is cash instead of using a credit card to pay for what I need or want. If the counter will ask me to pay in cash or credit card I always use cash. Current assets are useful in so many ways without you sometimes realizing it.

 

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