CURRENT ASSETS

Types of current assets

Submitted to
Sir Khursheed Ahmed Khan

University of Swat
Numan khan
NumanUos7@gmail.com Roll # 70 Semester 7th

Current Assets: A balance Sheet account that represents the value of all assets that are reasonably
convertible into cash within one year or less than that or in a normal course of business.it includes assets which are readily available to pay the current debts and are liquid.

Typical Current assets:

Cash: Cash is the most liquid type of current assets. Cash is the legal tender or coins that can be used an exchange of goods or to pay debt. It is that value of assets which can be used as very marketable and can be converted into cash immediately as reported by company.

Marketable Securities:
These are the second type of liquid assets listed on a balance sheet which can be converted into cash very easily and they have very little effect on prices. These securities can be bought and sold in one year or less than one year. The examples of these securities includes commercial paper, treasury bills, bankers acceptance and many other market securities.

Account Receivables:
The account receivables is generally the money owed by customers (individuals, corporations) to another entity in exchange of goods or services which has been delivered but have not paid yet. This is also the current asset of the company because it represents the legal obligation of the company over their customers and it is less than one year. The account receivables is given to the customer in the form of credit lines which ranges from few days to a year. Inventory: The raw materials, Work In process and finished goods all are considered inventory and to be considered as business assets which are ready for sale or will be ready for sale. This is one of the important asset of every organization where they possess certain asset and it will eventually generate revenue. It can be count one of the least liquid asset in the balance sheet because the inventory have not many buyers when you want to sell them as compared to the other assets. 1) Raw Materials: Raw materials are a material or substance used in the primary production or manufacturing of a good or service. Raw materials can be iron, wood or plastic etc. .It can also be used as a commodities.it can be sold as a final commodity to the companies. 2) Work in process :Materials that is already in a process .In accounting cycle these are the materials which entered into excludes the raw material and finished goods.it is also considered as current assets.it has generally the value higher than the raw materials and less than the finished goods. 3) Finished goods: This is the last stage of inventory where the materials are processed and which are being held for the delivery, sale or use.it is also a current asset because it has value to sale and or sold on credit.

Prepaid Expenses: A type of asset that arises on a balance sheet as a result of business
making payments for goods and services to be received in the near future. While prepaid expenses are initially recorded as assets, their value is expensed over time as the benefit is received onto the income statement, because unlike conventional expenses, the business will receive something of value in the near future.