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Week 2 Individual Assignment: Current N Noncurrent Assets

In: Business and Management

Submitted By teresanatera
Words 680
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Current and Noncurrent Assets
Student
ACC/440
September 16, 2013
Instructor

The accounting department within any organization is a vital component in the maintenance of revenue budgets and calculated gains or losses. Understanding assets and their importance to the accounting process is vital for any organization. Assets are resources owned by a company, which is expected to expand the value of the organization or benefit the operations. Assets can be divided into two categories current, and noncurrent. This classification of assets is helpful because it helps establish if the company has enough assets to pay its debts when they come due (Kimmel, Weygandt & Kieso, 2007). The following paragraphs will discuss current and noncurrent assets, and the differences between the two assets. Also, it will address the order of liquidity and how the order of liquidity applies to the balance sheet.
Current Assets Current assets, also known as short-term, “are cash and other resources that are reasonably expected to be realized in cash or sold or consumed within one year of the balance sheet date or the company's operating cycle, whichever is longer”. Current assets are also a balance sheet that will equal the total of cash equivalents and cash, prepaid expenses, marketable securities, accounts receivable, inventory, and additional assets that can be changed into cash within the operating cycle. Creditor’s interest will always be in the financial health of a business to make sure it has existing assets, since these assets can make the difference if the company goes bankrupt, then the assets ban be easily liquidated. Furthermore, current assets are very important because it is the basis of funds for the everyday operations (Schneider, 2013).
Noncurrent Assets Noncurrent assets, also known as long-term, are assets that are not easily…...

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