Current assets
Financial Accounting glossary · Assets: Cash, Receivables, Inventory, PP&E & Intangibles
Definition
Assets expected to be converted to cash, sold, or consumed within twelve months or the operating cycle.
Current assets in plain English
Current assets are the things a company owns that will turn into cash — or get used up — pretty soon, usually within a year. Think of the stuff in your wallet and backpack that you'll spend or use this school term: cash, snacks you'll eat, a gift card you'll redeem — as opposed to your bike, which you'll keep for years. For a business this means cash, inventory it expects to sell, and money customers still owe it. Grouping these separately matters because it shows whether the company has enough handy resources to cover its short-term bills.
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