Current Asset / Current Accounts

Current assets refer to a company's short-term assets that can be easily converted into cash within a year, such as cash, accounts receivable, inventory, and marketable securities. These assets are essential for day-to-day operations and managing liquidity. Current accounts, often part of current assets, represent the balance of funds in a bank account that is used for daily transactions, such as paying bills or receiving payments.

Example

A company’s current assets include $500,000 in cash, $200,000 in accounts receivable, and $300,000 in inventory, all of which are expected to be converted into cash within a year.

Key points

• Current assets are short-term assets that can be converted into cash within a year.

• Examples include cash, accounts receivable, inventory, and marketable securities.

• Current accounts are bank accounts used for daily transactions and are part of current assets.

Quick Answers to Curious Questions

What are current assets?

Current assets are short-term assets that can be easily converted into cash within one year, including cash, receivables, and inventory.

Why are current assets important for a business?

They are essential for managing liquidity, ensuring the company can meet its short-term obligations and operate smoothly.

What is a current account?

A current account is a bank account used for daily transactions, such as paying bills or receiving payments, and is considered part of a company’s current assets.