Current and Noncurrent Assets
Current and Noncurrent Assets
ACC/400
Current and Noncurrent Assets Paper Accounting covers a multitude of areas, although most people think it just adding, subtracting, and receiving a total for something the company has bought or sold but of course it is not all it entails. Accounting by Merriam-Webster definition is “the system of recording and summarizing business and financial transactions and analyzing, verifying, and reporting the results” (Merriam-Webster Incorporated, 2012). Accounting is the means that can measure or connect financial actions. This system covers a multitude of areas but this paper will concentrate on comparing and contrasting current and noncurrent assets. The paper will display the order of liquidity as well as the order of liquidity and how to apply it to the balance sheet. First, to get an understanding of assets there must be an understanding of what they are. Assets are things that a company obtains better known as resources that include things, such as buildings, computers, furniture, and trucks (Kimmel, Weygandt, & Kieso, 2007).
Current Assets The most important asset any company could have is cash, whether it is a small or large amount. The paper says what an asset is then the paper will tell what current assets are. Current assets is the expectation of what the company expects to change to cash or can deplete within a year. This does not just pertain to cash it can also include resources nor is the limit to one year, it also can be the company’s operating cycle. The time frame depends on the individual company and is whichever one is longer. Current assets are cash, inventories, prepaid expenses, receivables, short-term investments.
Noncurrent Assets The next step is learning what noncurrent assets are and how they affect any company. Noncurrent assets are intangible assets, long-term investments, property, plant, and equipment. The investment of these noncurrent assets can be in another company, and
ACC/400
Current and Noncurrent Assets Paper Accounting covers a multitude of areas, although most people think it just adding, subtracting, and receiving a total for something the company has bought or sold but of course it is not all it entails. Accounting by Merriam-Webster definition is “the system of recording and summarizing business and financial transactions and analyzing, verifying, and reporting the results” (Merriam-Webster Incorporated, 2012). Accounting is the means that can measure or connect financial actions. This system covers a multitude of areas but this paper will concentrate on comparing and contrasting current and noncurrent assets. The paper will display the order of liquidity as well as the order of liquidity and how to apply it to the balance sheet. First, to get an understanding of assets there must be an understanding of what they are. Assets are things that a company obtains better known as resources that include things, such as buildings, computers, furniture, and trucks (Kimmel, Weygandt, & Kieso, 2007).
Current Assets The most important asset any company could have is cash, whether it is a small or large amount. The paper says what an asset is then the paper will tell what current assets are. Current assets is the expectation of what the company expects to change to cash or can deplete within a year. This does not just pertain to cash it can also include resources nor is the limit to one year, it also can be the company’s operating cycle. The time frame depends on the individual company and is whichever one is longer. Current assets are cash, inventories, prepaid expenses, receivables, short-term investments.
Noncurrent Assets The next step is learning what noncurrent assets are and how they affect any company. Noncurrent assets are intangible assets, long-term investments, property, plant, and equipment. The investment of these noncurrent assets can be in another company, and
References: Bragg, S. (2011, October 26). What is the order of liquidity? Retrieved from http://www.accountingtools.com Kimmel, P. D., Weygandt, J. J., & Kieso, D. E. (2007). Financial accounting: Tools for business decision making (4th ed.). Hoboken, NJ: John Wiley & Sons. Merriam-Webster Incorporated. (2012). Accounting. Retrieved from http://www.merriam-webster.com Xstrata. (2011, March 16). Significant accounting estimates. Retrieved from http://www.exstrata.com de Guzman, R. (2009, October 4). Matching Principle in Accounts Receivable. Retrieved from http://www.articlesbase.com