What is a current asset?

Current Assets is an account listed on a balance sheet that shows the value of the assets owned by a company that can be converted to cash through liquidation, use, or sales within one year. Current assets include cash, cash equivalents, accounts receivable, stock inventory, marketable securities, pre-paid liabilities, and other liquid assets.

What are current assets & cash equivalents?

By definition, assets in the Current Assets account are cash or can be quickly converted to cash. Cash equivalents are certificates of deposit, money market funds, short-term government bonds, and treasury bills. To qualify as current assets, these items must not have any restrictions that inhibit their short-term liquidity.

What is the difference between current assets and non-current assets?

Current Assets is an account where assets that can be converted into cash within one fiscal year or operating cycle are entered. Non-Current Assets is an account where assets that cannot be quickly converted into cash—often selling for less than the purchase price—are entered.