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Important information about current and non-current assets

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Prepare a paper in which you compare and contrast current and non-current assets. In your paper be sure that you address the following:

1) What are current assets?
2) What are non-current assets?
3) What differs between current and non-current assets?
4) What is the order of liquidity?
5) How does the order of liquidity apply to the balance sheet?

Be sure to properly cite your references.

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Solution Summary

Contrast and compare: Current and Non-Current Assets.

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Current assets are a balance sheet item which equals the sum of cash and cash equivalents, accounts receivable, inventory, marketable securities, prepaid expenses, and other assets that could be converted to cash in less than one year.

Reference: Retrieved from http://www.investorwords.com/1245/current_assets.html

A non current asset is a type of asset which is not easily convertible to cash or not expected to become cash within the next year. Examples include fixed assets, leasehold improvements, and intangible assets. opposite of current asset.

Reference: Retrieved from http://www.investorwords.com/3313/noncurrent_asset.html

3) What differs between current and non-current assets?

Current assets are convertible to cash within 1 year, whereas non current asset are not easily convertible cash or not expected to become cash within 1 year. Non current assets often receive favorable tax treatment over current assets. Another major characteristic of non current assets is that are written off against profits over their ...

Solution provided by:
Sandeep Bardia, MBA
Education
  • BCom, SGTB Khalsa College, University of Delhi
  • MBA, Rochester Institute of Technology
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