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
- Debenture bonds
Debenture bonds also known as unsecured bonds issued against the general credit of the borrower.
- Materials price variance
Materials price variance is the difference between the actual quantity times the actual price and the actual quantity times the standard price for materials.
- The ledger
The ledger is the entire group of accounts maintained by a company. The ledger keeps in one place all the information about changes in specific account balances.
- Receivables turnover
Receivables turnover is a measure of the liquidity of receivables during the period; computed by dividing net credit sales (net sales less credit sales) by average net receivables.
- Materiality & Materiality principle
Materiality refers to the impact of an items’ size on a company’s financial operations. The materiality principle states that if an item would not make a difference...
- Unsecured bonds
Unsecured bonds, also called debenture bonds, are issued against the general credit of the borrower. Companies with good credit ratings use these bonds extensively.
- Segregation of duties
Segregation of duties (also called separation of functions) is indispensable in an internal control system. There are two common applications of this principle: