Definition of Current Assets
Current assets include cash and assets that are expected to turn to cash within one year of the balance sheet date. Current assets also include prepaid expenses that will be used up within one year. If a company’s operating cycle is longer than one year, the length of the operating cycle is used in place of the one-year time period.
Examples of Current Assets
Assets that are reported as current assets on a company’s balance sheet include:
- Cash, which includes checking account balances, currency, and undeposited checks from customers (if the checks are not postdated)
- Petty cash
- Cash equivalents, such as U.S. Treasury Bills which were purchased within 90 days of their maturity
- Temporary investments, such as certificates of deposit maturing within one year of the balance sheet date, and certain readily marketable securities
- Accounts receivable, or trade receivables, after deducting an allowance for doubtful accounts
- Notes receivable maturing within one year of the balance sheet date
- Other receivables, such as income tax refunds, cash advances to employees, and insurance claims
- Inventory of raw materials, work-in-process, finished goods, manufacturing and packaging supplies
- Office supplies
- Prepaid expenses, such as insurance premiums which have not yet expired
- Advance payments on future purchases
