Accounting glossary
What is current asset?
An asset expected to turn into cash within a year: cash itself, receivables, inventory, prepaid expenses. The ratio of current assets to current liabilities is the classic quick read on whether the next twelve months are funded.
Example
Cash of $14,000, receivables of $22,000 and inventory of $95,000 are all current assets — $131,000 expected to become cash within a year.
Against $60,000 of current liabilities that gives a comfortable current ratio; against $180,000 it would be a warning.
In SeroBooks
The Balance Sheet groups current and long-term automatically from the chart. Financial statements →
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