Current and Non-Current Assets

Current and Non-Current Assets Essay example
Undergraduate
Essay
Finance & Accounting
Pages 2 (502 words)
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Current assets can be defined as the set of assets which can be expected to be converted into cash readily in one year during the normal business cycle. Non-current assets which are also referred to as “Fixed assets” are the set of assets which can’t be easily converted into cash…

Introduction

Current assets can be defined as the set of assets which can be expected to be converted into cash readily in one year during the normal business cycle. These assets are also referred to as Liquid assets. Non-current assets which are also referred to as “Fixed assets” are the set of assets which can’t be easily converted into cash or not expected to become cash in a time span of one year. Current assets are also referred to as Liquid assets. Non-current assets are not directly sold to the organization’s end customers. The primary difference in current and non-current assets is in the time they take to get converted into cash. Current assets are more readily convertible into cash as compared to non-current assets which are fixed in nature. Both current as well as non-current assets are important to an organization. The current assets differ from business to business. Some scholars argue that inventory is not readily convertible in and shall not be included in the list of current assets. Fixed assets are generally classified in three line items: Long-term investments, property, plant and equipment and Goodwill and other intangible assets. Amongst non-current assets, goodwill is the least liquid because it is not easily quantifiable. ...
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