Current and Non-Current Assets
University of Phoenix
Starting a business calls for the acquisition of assets which help the business in its growing process. Assets are material or non-material resources of value owned or controlled by the company which was acquired at a measurable cost (Solution Matrix, 2004). There are two main specific types of assets: current assets and non-current assets, both of these are utilized for profit generating and/or service provision. “Company management and stockholders expect that assets justify their existence by producing returns” (Solution Matrix, 2004). Current and Non-Current assets are different and unique from one another, each providing a given value to the company. Current Assets
Current assets are short term assets which include cash and other assets that can be converted into cash in the near future, these include accounts receivable and finished goods inventory (Solution Matrix, 2004). Some short-term investments included in current assets include bonds, stocks, and certificates of deposit. Current assets make up an important figure in the businesses balance sheet and listed in order of liquidity. Liquidity refers to the expectation that the item can be converted to cash in at least close to its current value within one year (Main, 2008). Assets are listed in descending order of liquidity, with cash at the top of the list of assets. All this information is put on the top portion of the balance sheet which is the financial statement that lists assets, liabilities, and equity of a company in order to calculate the net worth of the business.
Non-Current assets as opposed to current assets are long-term assets. These assets include fixed assets and intangible assets. Fixed assets are all those tangible equipment, material or property that a business owns and uses to generate income, that are not...