Understanding Key Financial Concepts: Assets, Estimates, Internal Controls, andIntangible AssetsDQ 11.What is a current asset? What is a non-current asset? What is the difference between the twotypes of assets? In which financial statement would youfind these assets?What is a current asset?“Current assetsare assets that a company expects to convert to cash or use up within one year”(Kimmel, Weygandt, & Kieso,2007,p.49). Supplies or accounts receivable are current assets sincesupplies are expected to be used within one year, and accounts receivable are expected to be collectedwithin one year.According to the text, common types of current assets are:1.Cash2.Short-term investments3.Receivables4.Inventories5.PrepaidexpensesWhat is a non-current asset?The opposite of a current asset, a non-current asset is an asset that is not easily converted to cash ornot expected to become cash within one year.What is the difference between the two types of assets?As the definition of each indicates, current assets are assets thatareexpected to be used or convertedto cash within one year, whereas, noncurrent assets arenotexpected to be used or converted to cashwithin one year.Preview Mode
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