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Current and Noncurrent Assets

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July 7, 2014

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Current and Noncurrent Assets

Investments are a way that consumers can conserve and preserve financial securities in the modern markets. Distinguishing between the varieties of assets can be tricky for a first time investor. Primarily there’s what is known as current and noncurrent assets. The similarities and differences between them are slight, yet involve different components. When discussing these, the order of liquidity and how they apply to a balance sheet will also be outlined as well.

Current vs. Noncurrent Assets

According to Investopedia (2014), current assets are referred to the value of all assets or possessions that can be converted or liquidated to cash payouts, usually within a year. Such items on a balance sheet can be considered are cash, accounts receivable, inventory, marketable securities, prepaid expenses, and other assets that can be converted as well. Other examples of current assets are rent/insurance, office supplies, and other expenses for the day-to-day operations. In non-business functions can use this as means to convert to cash to pay off debts without dipping into an individuals fixed assets such as home.

Noncurrent assets refer to those that are also known as fixed assets such as buildings, properties, long-term investments such as stocks/bonds, patents, and trademarks. Usually these assets are held for a year or more, depending on the life-expectancy and depreciation value of these assets. According to BrightHub (2010), these assets cannot be sold to the general public or easily liquidated quickly into cash, while also runs into the possibility subjecting to various tax rebates and exemptions.

In accounting, both current and noncurrent assets account for the overall revenue gains and losses in a company. Often the terms combined can be referred to as intangible assets, which are assets that are not physically in existence such as trademarks and...