Current asset
What is a current asset?
A current asset is cash, or something that should turn into cash within a year.
Inventory, trade receivables and money in the bank are current assets.
A van or a machine is not current. It is a non-current asset.
Example
A shop has inventory of £9,000.00, trade receivables of £4,000.00 and £3,000.00 in the bank. Its current assets are £16,000.00.
Why it matters
Current assets are compared with current liabilities, the amounts due within a year. Current assets less current liabilities are the net current assets.
Practise it
Practise it nowThe statement of financial position for a sole trader
Ledger Drill is practice, not tax or accounting advice. If this looks wrong, tell us at [email protected].