October 23, 2011
Current and Noncurrent Assets Paper
When an individual starts a business understanding financial statements are vital to tracking the company profits and losses. The company decisions are often decided by the figures and statistics. The figures are recorded and compared at a later date. Accounting knowledge is the core of the business and every aspect of a growing company depends heavenly on understanding the basic concept of debits and credits. Companies often develop departments that handle a large in flow of activity. The department keeps track of how well the business is performing and should be well staff with enough employees to fits the demands the company. When making certain that the business financial operation is running smoothly knowledge of the difference between current and noncurrent asset should be explored. The organization must also understand the order of liquidity and how it applies to the balance sheet. The accounting department is always concern with the basic concept of assets. An asset is anything that the business owns or will own in the near future. Assets add worth to the business and often determine if the business will have success. Assets are broken down into two groups’ current assets and noncurrent assets. According to Webster 2004, current asset is defined as “assets that will be sold, used up, or turned into cash within the current accounting period, usually one-year period.” An example of current assets is cash, accounts receivable, supplies, and inventory. Current asset are listed on the financial balance sheet and represent incoming revenue and a future worth to the company. Noncurrent assets are asset that takes longer than an accounting cycle before turning into cash. Noncurrent resources generate profits for the company. An example of noncurrent assets is property, land, equipment, and vehicles. Noncurrent asset also can be a long term investment,...