Current Assets
Current
assets are cash and other assets expected to be converted to cash or consumed
either in a year or in the operating cycle (whichever is longer), without
disturbing the normal operations of a business. These assets are continually turned over in the course of a business
during normal business activity. There are 5 major items included into
current assets:- Cash and cash equivalents — it is the most liquid asset, which includes currency, deposit accounts, and negotiable instruments (e.g., money orders, cheque, bank drafts).
- Short-term investments — include securities bought and held for sale in the near future to generate income on short-term price differences (trading securities).
- Receivables — usually reported as net of allowance for noncollectable accounts.
- Inventory — trading these assets is a normal business of a company. The inventory value reported on the balance sheet is usually the historical cost or fair market value, whichever is lower. This is known as the "lower of cost or market" rule.
- Prepaid
expenses
— these are expenses paid in cash and recorded as assets before they are
used or consumed (a common example is insurance). See also adjusting entries.
Marketable securities that can be
converted into cash quickly at a reasonable price
The phrase net current assets
(also called working capital) is often used and
refers to the total of current assets less the total of current liabilities.
An asset
such as receivables,
inventory,
work in
process, or cash,
that is constantly flowing in and out of an organization
in the normal course of its business,
as cash is converted into goods
and then back into cash. In accounting,
any asset expected to last or be in use for less than one year is considered a
current asset. Also called circulating
asset
Long-term liabilities
Long-term
liabilities are liabilities with a future benefit over one
year, such as notes payable that mature longer than one year.
In
accounting, the long-term liabilities are shown on the right wing of the
balance-sheet representing the sources of funds, which are generally bounded in
form of capital assets.
Examples of long-term liabilities are
debentures,
mortgage
loans and other bank loans.
(Note: Not all bank loans are long term
as not all are paid over a period greater than a year, an example of this is a bridging loan.)
By
convention, the portion of long-term liabilities that must be paid in the
coming 12-month period are classified as current liabilities. For example, a loan for
which two payments of $1000 are due, one in the next twelve months and the
other after that date, would be 'split' into two: the first $1000 would be
classified as a current liability, and the second $1000 as a long-term
liability (note this example is simplified, and does not take into account any
interest or discounting effects, which may be required depending on the
accounting rules).
Also "long-term liabilities" are
a way to show that you have to pay something off in a time period
longer than one year.
Simple Present Tense
1. - These assets are
continually turned over in the course of a business during normal business
activity (+)
- These
assets aren’t continually turned over in
the course of a business during normal business activity (-)
- Are these
assets continually turned over in the course of a business during normal
business activity? (?)
2. - Cash and cash equivalents it is the
most liquid asset, which includes currency,
deposit
accounts, and negotiable instruments (+)
- Cash and cash equivalents it isn’t the most liquid asset,
which includes currency,
deposit
accounts, and negotiable instruments (-)
- is the
most liquid asset, which includes currency,
deposit
accounts, and negotiable instruments? (?)
3. - Receivables
usually reported as net of allowance for noncollectable accounts. (+)
- Receivable doesn’t usually reported as
net of allowance for noncollectable accounts. (-)
-
Does receivable usually reported as net of
allowance for noncollectable accounts? (?)
4. - Inventory
trading these assets is a normal business of a company (+)
- Inventory
trading these assets isn’t a normal
business of a company. (-)
- Is inventory
trading these assets a normal business of a company? (?)
5. - The
inventory value reported on the balance sheet
is usually the historical cost or fair market value, whichever is lower (+)
- The
inventory value reported on the balance sheet
isn’t usually the historical cost or fair market value, whichever is lower (-)
- Is the
inventory value reported on the balance sheet
usually the historical cost or fair market value, whichever is lower? (?)
6. - The
phrase net current assets (also called working
capital) is often used and refers to the total of current assets
less the total of current liabilities (+)
- The
phrase net current assets (also called working
capital) isn’t often used
and refers to the total of current assets less the total of current liabilities (-)
- Is the
phrase net current assets (also called working
capital) often used and refers to the total of current assets
less the total of current liabilities? (?)
7. - Long-term liabilities are liabilities with a future benefit over one
year, such as notes payable that mature longer than one year (+)
- Long-term
liabilities aren’t liabilities with a future benefit over one
year, such as notes payable that mature longer than one year (-)
- Are long-term liabilities with a future benefit over one
year, such as notes payable that mature longer than one year? (?)
8. - Examples of long-term liabilities are debentures,
mortgage
loans and other bank loans. (+)
- Examples of long-term liabilities aren’t
debentures,
mortgage
loans and other bank loans. (-)
- Are examples of long-term liabilities debentures,
mortgage
loans and other bank loans? (?)
9. - Also "long-term liabilities" are
a way to show that you have to pay something off in a time period
longer than one year (+)
- Also "long-term liabilities" aren’t a
way to show that you haven’t to pay something off in a time period
longer than one year (-)
- Are also "long-term liabilities" a way to
show that you have to pay something off in a time period longer than one
year? (?)
10. - Not all bank loans are long term as not all are
paid over a period greater than a year, an example of this is a bridging loan
(+)
- Not all bank loans aren’t long term as not all are paid
over a period greater than a year, an example of this is a bridging loan
(-)
- Are not all bank loans long term as not all are paid over a
period greater than a year, an example of this is a bridging loan?
(?)
Sumber Artikel : http://en.wikipedia.org/wiki/Current_liability
