Question

Discuss what makes an asset “current” and describe a situation where an account may be considered both current or long-term, or may differ dependent on the industry reviewed.

Answer 1

An Asset may be defined as a Current Assets if the assets can be converted into cash within one year or less of the date of occurence on the Balance sheet. The example of the assets are Cash, Marketable securities, Accounts Receivable, Inventory etcc..

An example of Asset that can be considered as both current or long-term is Notes Receivable- If the Notes are due for repayment withing 12 months then it could be shown under the heading of Current Assets but if its due for repayment after 12 months it can be classified as Non-Current Assets