Date created: Oct 25, 2022 • Last updated: Feb 10, 2023
What is Current Assets?
Current assets reflect a company’s assets on the Balance Sheet or Statement of Financial Position and are easily liquidated or converted to cash within one year. Companies often use current assets in conjunction with current liabilities to calculate different liquidity ratios. Some common accounts that fall under current assets are cash and cash equivalents, accounts receivable, prepaid expenses, trade receivable, and many others depending on industry.
Current Assets Formula
How to calculate Current Assets
A company has the following account balances at year end, cash $500,000, account receivable $140,000, prepaid expenses $20,000, building equipment $90,000, and trade receivable of $10,000. To calculate current assets the following accounts must be added as follows ($500,000+$140,000+$20,000+$10,000=$670,000). Current assets totals $670,000, note that building equipment is a non-current asset that is depreciated over multiple years.