Current Assets: Are cash and non cash assets that are readily converted to cash and are available to pay current liabilities, or non cash assets that are consumed in operations within one year or the operating cycle, whichever is longer. There are several traditional accounts that are classified as current assets on the balance sheet.
CASH - An asset consisting of coins, bills, money orders, Checks, Certificates of deposit, or treasury bills
Fixed Deposits Receipts - For certain periods - 1 year.
Treasury Bills - Issued by the government.
Notes Receivable - Written promises in the hands of the creditors, that serve as evidence of debts
Accounts Receivable - A current asset for which an oral promise to pay, made by the customer, serve as evidence. Accounts used to record the amounts owed by charge customers (legal claims against charge customer).
Note: performed services or sales item.
Merchandise Inventory - Represents the value of goods on hand, either at the beginning or end of the accounting period.
Accounting Period - The period of time, no more than 1 year, covered by the three financial statements.
Supplies - One type of asset acquired by a firm; has much shorter life than equipment. Such as pencil, stationery, etc.
Prepaid Rent - An asset account an item that normally is considered to be an expense but, because it is paid in advance, is classified as an asset. When the value of the asset has been used up, an adjusting entry will convert this prepaid expense (asset) to an actual expense. Such as insurance policies and rent paid in advance.
