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Current assets are those resources that the entity expects to convert to cash or consume during the next fiscal year 1. Examples of current assets include:
- cash, comprising paper currency and coins, deposits at banks, cheques, and money orders.
- short-term investments, cash that is invested in interest-bearing deposits or shares that are easily convertible back into cash.
- accounts receivable that are due to be collected within one year.
- notes receivable, account receivables with formalized, written promises to pay specified amounts with interest, and due to be collected within one year.
- merchandize inventory that is expected to be sold within one year.
The current asset category also includes accounts whose future benefits are expected to expire within one fiscal year, such as:
- prepaid expenses, usually consisting of advance payments for insurance, rent, and similar items.
- supplies on hand at the end of an accounting year that will be used during the next year.
In North America, current assets are normally reported before noncurrent assets on the balance sheet. They are listed by decreasing levels of liquidity – their ability to be converted into cash. Therefore, cash appears first under the current asset heading.
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