Current and Noncurrent Assets

In: Business and Management

Submitted By lauretta987
Words 930
Pages 4
Accounting is thought of by many as simply basic mathematics consisting of adding and subtracting totals to track a company’s spending and expenses; however, accounting involves so much more. Accounting comprises of a multitude of financial concepts and transactions. According to Kimmel, Weygandt, and Kieso, “accounting is the information system that identifies, records, and communicates the economic events of an organization to interested users” (Kimmel, Weygandt, & Kieso, 2011, p. 5). This system covers a broad array of information but in this paper the current and noncurrent assets will be defined, contrasted, and compared. In addition, the order of liquidity and how this practice applies to the balance sheet will be reviewed. Accounting is the means of communicating the numbers and to be successful in business the numbers have to be known “cold”. Therefore, it is imperative not only to communicate the numbers effectively but also to understand them to thrive in a world submerged with figures.
Current Assets
To understand assets, they first must be defined. Assets are resources such as land, computers, buildings, cash, and supplies owned by an organization. Cash is the most important asset that any business can possess. Consequently, cash is considered a current asset. Current assets are those resources that a business anticipates to replace with cash or deplete within 12 months or its operating cycle dependent upon whichever is farther away. The common practice for most businesses is the cutoff to be classified as current assets is one year from the balance sheet date. Current assets include short-term investments, cash, receivables, prepaid expenses, and inventories. For example, accounts receivable are current assets because a firm expects to collect payments and convert these payments to cash within one year. Businesses list current assets in the order in…...

Similar Documents

Current and Noncurrent Assets Paper

...Current and Noncurrent Assets Paper ACC/400 Current and Noncurrent Every organization must account for the various activities happening every day. This includes everything from the office supplies employees’ use daily, to the office supplies that stay and are used for years by employees. The basic or most generalized titles and items are included on the balance sheet, and here investors, company members, or the public can locate both current and noncurrent assets. These are both assets to the company and could be converted into cash if the company chooses. Below defines the differences between current and noncurrent assets, and it also describes liquidity of an asset. Current The basic definition of an asset is any item a company has that can be convert into cash or use within a year. Examples of an asset are staples, cash, accounts receivable, and short-term investments. These are items a company has that will be sold, paid-on, or remain as cash within a year, or 12 months. For anyone to start a business the person must have items, such as light, materials, and cash. These items are known as current assets and will either deteriorate or convert into cash in a year. A company will collect and convert an accounts receivable item into cash within a year, so it is a current asset. A company’s current assets tell its short-term liability paying ability. Non-Current Assets If an asset will not be converted into cash or used within a year it is a non-current......

Words: 706 - Pages: 3

Compare and Contrasting Current and Non-Current Assets

...Comparing and Contrasting Current and Noncurrent Assets In financial accounting, a balance sheet statement is one of the main financial statements that managers and investors look at when looking at the financial health of any company. The balance sheet consists of assets, liabilities and ownership equity at a specific date in time. Most balance sheet statements are created to reflect the financial health of the company at the end of the company’s fiscal period. This paper will be focusing on comparing and contrasting the two categories of assets. Assets can be divided in to two categories; current and noncurrent asset. These two categories of assets are an essential part of financial statements and are found in the balance sheet statement of any company. Current assets are defined as “the value of all assets that are reasonably expected to be converted into cash within one year in the normal course of business” (“Current Assets”, n.d). Current assets include cash, accounts receivable, inventory, marketable securities, prepaid expenses and other liquid assets that can be easily changed into cash. Current assets in personal financing follow the same concept as assets in a company. Current assets in personal financing are all assets that a person can readily convert into cash to pay outstanding debts and cover liabilities without having to sell any of their fixed assets (“Current Assets”, n.d). Noncurrent or fixed assets are defined as a company’s long-term investments......

Words: 802 - Pages: 4

Week 2 Individual Assignment: Current N Noncurrent Assets

... Current and Noncurrent Assets Student ACC/440 September 16, 2013 Instructor The accounting department within any organization is a vital component in the maintenance of revenue budgets and calculated gains or losses. Understanding assets and their importance to the accounting process is vital for any organization. Assets are resources owned by a company, which is expected to expand the value of the organization or benefit the operations. Assets can be divided into two categories current, and noncurrent. This classification of assets is helpful because it helps establish if the company has enough assets to pay its debts when they come due (Kimmel, Weygandt & Kieso, 2007). The following paragraphs will discuss current and noncurrent assets, and the differences between the two assets. Also, it will address the order of liquidity and how the order of liquidity applies to the balance sheet.  Current Assets Current assets, also known as short-term, “are cash and other resources that are reasonably expected to be realized in cash or sold or consumed within one year of the balance sheet date or the company's operating cycle, whichever is longer”. Current assets are also a balance sheet that will equal the total of cash equivalents and cash, prepaid expenses, marketable securities, accounts receivable, inventory, and additional assets that can be changed into cash within the operating cycle. Creditor’s interest will always be in the......

Words: 680 - Pages: 3

How to Value Tangible Non Current Assets

...value tangible non current assets “Valuing tangible non-current assets is subjective and complex and can therefore result in different companies valuing similar assets very differently.” Discuss this statement with specific regard to your knowledge of how tangible non-current assets discussion. Valuing tangible non-current assets can be subjective and complicated. This essay explains it from two aspects, costs of PPE and depreciation respectively, under the international accounting standards. Property, plant and equipment are the representative of tangible non-current assets which commonly are held by business entity. When to value assets the definition from the outset that should be understood is carrying account. According to IAS16, carrying amount is defined as” the amount at which an asset is recognized after deducting any accumulated depreciation and accumulated impairment losses”. Therefore, subjectivity of valuing tangible non-current assets can be attributed to recognized cost, accumulated depreciation. From the outset the cost should be measured after assets are recognized. This is the first step that confirms initial costs. When buying same assets, the costs can be totally different. For example, the items of assets can have many spare parts which may be minor or major for corporation usage. However, if the corporation defines that this spare parts is important-major spare parts, this amount should belong to part of costs of this assets. In contrary,......

Words: 1023 - Pages: 5

Current Assets

...Assets are formally controlled and managed within larger organizations via the use of assets tracking tools. These monitor the purchasing, upgrading, servicing, licensing, disposal etc., of both physical and non-physical assets. Current assets Current assets are cash and other assets expected to be converted to cash or consumed either in a year or in the operating cycle (whichever is longer), without disturbing the normal operations of a business. These assets are continually turned over in the course of a business during normal business activity. There are 5 major items included into current assets: 1. Cash and cash equivalents — it is the most liquid asset, which includes currency, deposit accounts, and negotiable instruments (e.g., money orders, cheque, bank drafts). 2. Short-term investments — include securities bought and held for sale in the near future to generate income on short-term price differences (trading securities). 3. Receivables — usually reported as net of allowance for noncollectable accounts. 4. Inventory — trading these assets is a normal business of a company. The inventory value reported on the balance sheet is usually the historical cost or fair market value, whichever is lower. This is known as the "lower of cost or market" rule. 5. Prepaid expenses — these are expenses paid in cash and recorded as assets before they are used or consumed (common examples are insurance or office supplies). See also adjusting entries. Marketable...

Words: 558 - Pages: 3

Capital Current Assets

...Working capital: Current assets minus current liabilities. Working capital measures how much in liquid asset as company has available to build its business. The number can be positive or negative, depending on how much debt the company is carrying. In general, companies that have a lot of working capital will be more successful since they can expand and improve their operations. Companies with negative working capital may lack the funds necessary for growth. also called net current assets or current capital. Current Assets: Current assets are those assets that are expected to be used (sold or consumed) within a year, unlike fixed assets. Current assets are shown on the balance sheet, and are listed in order of increasing liquidity (i.e. how easy they are to convert to cash). Usually stocks will be listed first, followed by debtors, with cash last. Current Liabilities: Liabilities that will be due within a short time (less than one year) and that are to be paid out of current assets are called current liabilities. The most common liabilities in this group are notes payable and account payable (c) The man problem that a business may face if there is no enough working capital is financial difficulties. With out proper funding a business cannot meet there day to day operations. Every business need some amount to purchase the raw material. Rate of return on investments also fall with the shortage of working capital. Excess working capital may result into over all......

Words: 408 - Pages: 2

Noncurrent and Current Paper

...Current and Noncurrent Assets Paper University of Phoenix ACC/400 John Opincar December 09, 2010 Current and Noncurrent Assets Paper The classified balance sheet displays a picture of a corporation’s financial status at any stage. To enhance user’s comprehension of an organization’s financials, the balance sheets are typically position in a specific order whereby, financial statements elements are categorize in subgroups such as current and noncurrent. These groups determine, for example, if the corporation has sufficient resources toward balances due, and the demands of immediate and continuing creditors on the corporation entire assets. This paper will explain the differences and similarities between current and noncurrent assets, define the order of liquidity, and how does the order of liquidity apply to the balance sheet. The current assets are assets, which a company anticipates to change to currency or spend by year-end. Classification as current assets is one-year from the balance sheet date for the majority of companies. For instance, a business will accumulate their accounts receivable known as current assets and change them to currency by year-end. Supplies are current assets and essential during operation; therefore, used by year-end. Classify assets and liabilities as current for a period longer than a year, by countless businesses because of their operating cycle. The business operating cycle is the standard period necessary to......

Words: 659 - Pages: 3

Current and Noncurrent

...in the black and white tables of assets and debits can, that the company is important and prosperous” (Schudson). Current and Noncurrent assets is important to have for any business. In this paper the subject is to discuss both of these and what the differences are between those. Also to understand the order of liquidity and the order of liquidity apply to the balance sheet. What are current assets? Current assets are the value of certain assets that can be converted into cash within a year or less. Current assets are important for any business to have because it provides the company the funds to operate day-to-day. Some of the current assets which a business may have on hand that can be easily converted into cash are inventory, accounts receivable, and cash itself. One way to look at it is that an owner of a restaurant recently received a shipment in of fruits and vegetables they can turn this into cash by serving many dishes with the fresh fruit and vegetables in it. Noncurrent assets are one that could not be turned in cash in a span 12 months or longer. This is also a necessity for any business to have. What noncurrent assets entails is equipment purchased for the business to operate, the plant or store itself. This is something that a company cannot sell right away but one could sell down the road to provide the business with upgrades. It may also provide enough cash to move into a bigger facility. A noncurrent asset like machinery and equipment is......

Words: 693 - Pages: 3

“Valuing Tangible Non-Current Assets Is Subjective and Complex and Can Therefore Result in Different Companies Valuing Similar Assets Very Differently”

...“Valuing tangible non-current assets is subjective and complex and can therefore result in different companies valuing similar assets very differently” Financial reporting attempts to measure the worth of assets, a concept that is inherently subjective and arbitrary. We can never know the true value of an asset, and rather than being an objective truth, valuations are always biased. Financial reporting is used for different purposes by different users and so each different way might be appropriate in different circumstances and values are affected by the purpose of measurement. Property, plant and equipment are the main non-current assets that a company holds. Similar assets can be valued differently in different companies due to several different factors which I will discuss in this essay. Tangible non-current assets are usually valued by using the historical cost, which is the initial cost of acquiring the asset to the company. The IFRS states that the historical cost of an item not only includes the price paid for it, but also “any costs directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management.” This includes transportation and labour costs, and the cost of site preparation. Different companies may have different views on whether costs involved in bringing the asset into use should be counted as part of the asset or an expense, and often small costs that should be......

Words: 1373 - Pages: 6

Current and Noncurrent Assets

...Current and Noncurrent Assets Paper Elizabeth Webb ACC/400 August 18, 2011 Frank Gutierrez Abstract The purpose of this paper is to address the meanings of current and noncurrent assets while stating their differences. The paper will also include what the order of liquidity is and how it applies to the balance sheet. Current and Noncurrent Assets Paper Current Assets Current assets, also known as short-term, “are cash and other resources that are reasonably expected to be realized in cash or sold or consumed within one year of the balance sheet date or the company's operating cycle, whichever is longer” (simplestudies.com). Current assets is also a balance sheet item that will equal the total of cash and cash equivalents, accounts receivable, inventory, marketable securities, prepaid expenses, and other assets that can be converted to cash in less than one year. A company's creditors will often be interested in how much that company has in current assets, since these assets can be easily liquidated in case the company goes bankrupt. In addition, current assets are important to most companies as a source of funds for day-to-day operations. Noncurrent Assets Noncurrent assets, also known as long-term, are assets that are not easily converted into cash or that are not expected to turn into cash within the following year. Examples of noncurrent assets include fixed assets, leasehold improvements, and intangible assets. Noncurrent assets are the......

Words: 552 - Pages: 3

Acc 400 Week 1 Individual Assignment Current and Noncurrent Assets Paper

...ASSIGNMENT CURRENT AND NONCURRENT ASSETS PAPER To purchase this visit here: http://www.nerdypupil.com/product/acc-400-week-1-individual-assignment-current-and-noncurrent-assets-paper/ Contact us at: nerdypupil@gmail.com ACC 400 WEEK 1 INDIVIDUAL ASSIGNMENT CURRENT AND NONCURRENT ASSETS PAPER • Prepare a 700-1050 word paper comparing and contrasting current and noncurrent assets. In your paper, address the following: 1. What are current assets? 2. What are noncurrent assets? 3. What differs between current and noncurrent assets? 4. What is the order of liquidity? 5. How does the order of liquidity apply to the balance sheet? Format your paper according to APA standards. You must cite all references. If you used an electronic source, include the URL. If you used a printed source or reference pages from the virtual organizations, attach a copy of the data to your paper. Home Work Hour aims to provide quality study notes and tutorials to the students of ACC 400 Week 1 Individual Assignment Current and Noncurrent Assets Paper in order to ace their studies. ACC 400 WEEK 1 INDIVIDUAL ASSIGNMENT CURRENT AND NONCURRENT ASSETS PAPER To purchase this visit here: http://www.nerdypupil.com/product/acc-400-week-1-individual-assignment-current-and-noncurrent-assets-paper/ Contact us at: nerdypupil@gmail.com ACC 400 WEEK 1 INDIVIDUAL ASSIGNMENT CURRENT AND NONCURRENT ASSETS PAPER • Prepare a 700-1050 word paper comparing and contrasting current and noncurrent assets.......

Words: 901 - Pages: 4

Current and Noncurrent Assets

...Current and noncurrent assets Becoming an effective accountant requires knowledge of terminologies that provide a better understanding of financial responsibilities and business processes. Accountants must provide information about concepts, definitions, and accounting terms. To prepare budgets, forecasts, and other financial duties an accountant must also understand basic accounting principles. Assets provide businesses and investors with revenue that can increase income profits or cause assets to decline. This summary will compare and contrast two assets that businesses and investors use to determine the financial status of a company. Additional topics to discuss include the order of liquidity for current and noncurrent assets and the levels of asset in the balance sheet. Current assets Assets are a type of revenue that businesses manage to increase revenue and achieve value. Kimmel, Weygandt, and Kieso (2007) add “Different types of assets are given different names” (p. 10). Companies also describe assets as current and noncurrent assets. Current assets include cash, accounts receivable, and inventory. These assets are highly liquid because they convert into cash within a one-year operating cycle. Companies with large amounts of current assets need to implement internal controls to safeguard assets. Current assets are also used to conduct day-to-day operations in the workplace. Noncurrent assets Noncurrent assets are another source of revenue that......

Words: 807 - Pages: 4

Current and Noncurrent Asset

...Current and Noncurrent Assets Paper Every business must have assets to generate income for the business. Businesses must account for all assets in their balance sheets regardless if what is being reported are assets or non-assets. Balance sheets are organized in a particular way so that financial statements fundamentals are arranged in subgroups. Some of the basic examples of assets consist of cash, accounts receivables, and prepaid expenses. Examples of non-current assets consist of fixed assets, intangible assets such as equipment and property, and long term notes receivables. This paper will analyze the meaning of assets and non-assets and compare and contrast the two terms. Current Assets Current assets are short-term assets that a company plans on using or converting within a fiscal year. These assets are defined as company property, which provide benefits to the company. Current assets can be sold, lent, or lease to produce income or help generate value for the business. On a balance sheet companies list the current assets on the top section as it is available to use for the company and they are listed in the order of liquidity. The assets that are listed are cash, short term investments, receivables, inventories, and prepaid expenses. Some company’s accounting and operating fiscal year are longer than one calendar to classify assets and liabilities (Kimmel, Weygandt, & Kieso, 2007). Non-Current Assets Non-current assets are investments made by the company that...

Words: 668 - Pages: 3

Current and Noncurrent Asset Paper

...Current and noncurrent Assets In every business, the accounting department is an essential part in the maintenance of the organization. Understanding assets and their importance to the accounting process is imperative for any company. Without assets organizations could not operate. Current and noncurrent assets are the two assets this paper will address. In addition, this paper will also address the order of liquidity as well as how the order of liquidity applies to the balance sheet. Current Assets Current assets are cash and other resource that companies reasonably expect to convert to cash or use up within one-year or the operating cycle, whichever is longer (Kimmel, Weygandt, & Kieso, 2007). Current assets consist of cash, short-term investment, receivables, inventories, and pre-paid expenses. These types of assets are critical to the organization because they are a source of funds necessary for the day-to-day operation of the company. Noncurrent Assets Noncurrent assets are long-term assets that organizations intent to hold for at least a one-year period or longer and are not easily convertible to cash. Property, plant, and equipment and intangible assets (patents, trademarks, and licenses), and natural resources (mines, silver, and gold, etc.) are several types of noncurrent assets. These assets are important to the financial health of an organizations operation; they provide a constant source of revenue. Difference between current and noncurrent......

Words: 678 - Pages: 3

Cuirrent and Noncurrent

...Current and Noncurrent Assets Ernest Respi ACC/400 June 25, 2012 Lane Groff Current and Noncurrent Assets Accounting is a way a business records transactions, keeps financial records, performs audits, and reports information. Accounting shows profits and losses for a business at any given time, it shows assets and liabilities. This is an important part of every business; a business must know exactly where all its assets and liabilities are in order to grow. Accounting provides the methods to track assets and define if these assets or gains or losses, current and noncurrent assets is one way to category gains and losses. Current assets is “an asset such as receivables, inventory, work in process, or cash, that is constantly flowing in and out of an organization in the normal course of its business, as cash is converted into goods and then back into cash. In accounting, any asset expected to last or be in use for less than one year is considered a current asset” (Business dictionary). Current assets is the day to day business of a company, this assets is what a company uses to support the day to day function of the company. There are five main types of current assets cash or its equivalents, investments, account receivables, inventory and pre paid expenses. Current assets are found in financial records such as a balances sheet, this give stakeholder a way to view and track the company’s growth. Noncurrent assets is “an asset that is not expected to be turned into cash...

Words: 862 - Pages: 4

The Nun (2018) CAM IMDb 6.6 Genre: Horror; Mystery; Thriller; A priest with a haunted past and a novice on the threshold of her final vows are sent by the Vatican to investigate the death of a young nun in Romania and confront a malevolent force in the form of a demonic nun. | Ramji Gulati | Xiaogang Feng