Current assets are that a company expects to convert to cash or use up within one year. For most businesses the cutoff for classification as current assets is one year from the balance sheet date. For example, accounts receivable are current assets because the company will collect them and covert them to cash within one year. A supply is a current asset because the company expects to use it up in operations within one year.
More from this Section
- Outstanding stock
Outstanding stock means the number of shares of issued stock that are being held by stockholders.
- Time ticket
The time ticket is a document that indicates the employee, the hours worked, the account and job to be charged, and the total labor cost.
- Internal rate of return (IRR)
Internal rate of return (IRR) is the interest rate that will cause the present value of the proposed capital expenditure to equal the present value of the expected net annual cash flows.
- Cost principles
The cost principles, also known as the historical cost principle is one of the basic underlying guidelines in accounting, dedicates that companies record assets at their cost.
- Purchase invoice
Purchase invoice refers to a document that supports each credit purchase. This invoice indicates the total purchase price and other relevant information.
- Statement of earnings
Statement of earnings refer to the document that show the employee’s gross earnings, payroll deductions, and net pay, both for the period and for the year-to-date.
In liquidation, the sale of noncash assets for cash is called realization. Any difference between book value and the cash proceeds is called the gain or loss on realization.