September 25, 2010
University of Phoenix
Comparing and contrasting current and noncurrent
What are current assets?
Current assets are also known as liquid assets. The most common of current assets can be found in the Accounts Receivables department. They can be found in the form of invoices. Current assets are any assets that can be turned into cash in less than a year. Other forms of current assets are things such as inventory, short-term investments, prepaids, and, of course, cash (Williams, Haka, & Bettner, 2005).
As a rule, companies view current assets as anything that can be converted into cash within …show more content…
Noncurrent assets are anything that is not a current asset. Things such as long-term investments, intangible assets, and fixed assets. A noncurrent asset is something that cannot be turned in cash within a normal operating cycle (Williams, Haka, & Bettner, 2005).
What differs between current and noncurrent assets?
The biggest difference between current and noncurrent assets is that one can be converted into cash within a normal operating cycle, current assets, and the other cannot, noncurrent assets. As stated before current assets can be sold off to give the company operating cash to prevent the company from being insolvent (Williams, Haka, & Bettner, 2005). Noncurrent assets can be used as collateral to attain a loan, I think.
What is the order of liquidity?
The order of liquidity is the order in which items appear on the balance sheet according to its solvency (Williams, Haka, & Bettner, 2005). This way a person looking at a balance sheet will know what will sell faster to raise money for the company should the need arise.
How does the order of liquidity apply to the balance …show more content…
| | |
|How does the order of liquidity apply to the balance sheet? | | |
| | | |
|The content is comprehensive, accurate, and/or persuasive. | | |
|The paper develops a central theme or idea directed toward the | | |
|appropriate audience. | | |
|The paper links theory to relevant examples of current experience and | | |
|industry practice and uses the vocabulary of the theory correctly. | | |
|Major points are stated clearly; are supported by specific details, | |Major points clearly stated, but