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Compare and Contrasting Current and Non-Current Assets

In: Business and Management

Submitted By monstious
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Comparing and Contrasting Current and Noncurrent Assets In financial accounting, a balance sheet statement is one of the main financial statements that managers and investors look at when looking at the financial health of any company. The balance sheet consists of assets, liabilities and ownership equity at a specific date in time. Most balance sheet statements are created to reflect the financial health of the company at the end of the company’s fiscal period. This paper will be focusing on comparing and contrasting the two categories of assets. Assets can be divided in to two categories; current and noncurrent asset. These two categories of assets are an essential part of financial statements and are found in the balance sheet statement of any company. Current assets are defined as “the value of all assets that are reasonably expected to be converted into cash within one year in the normal course of business” (“Current Assets”, n.d). Current assets include cash, accounts receivable, inventory, marketable securities, prepaid expenses and other liquid assets that can be easily changed into cash. Current assets in personal financing follow the same concept as assets in a company. Current assets in personal financing are all assets that a person can readily convert into cash to pay outstanding debts and cover liabilities without having to sell any of their fixed assets (“Current Assets”, n.d).
Noncurrent or fixed assets are defined as a company’s long-term investments where the full value will not be reached within the accounting year. Noncurrent assets are capitalized rather than expensed, meaning that the company allocates the cost of the asset over the number of years for which the asset will be in use (“Noncurrent Assets”, n.d). Examples of noncurrent assets include investments, intangible assets, property, plant and equipment. Noncurrent assets must…...

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