Purchase Solution

Current and Noncurrent Assets are Defined and Compared

Not what you're looking for?

Ask Custom Question

Prepare a paper comparing and contrasting current and noncurrent assets. In your paper, address the following:

- What are current assets?
- What are noncurrent assets?
- What differs between current and noncurrent assets?
- What is the order of liquidity?
- How does the order of liquidity apply to the balance sheet?

Purchase this Solution
Solution Summary

The current and non-current assets are defined and compared. The order of liquidity is given.

Solution Preview

CURRENT AND NONCURRENT ASSETS

Assets are considered as resources owned by the firm and are of three categories - current assets, fixed assets, and other assets.

Current assets

Current assets include cash, accounts receivable, inventories, and prepaid expenses. The cash part of the current assets is intended to be used by the company in its current business operations. Accounts receivable are collectibles from customers who bought on credit. Inventories may take the form of raw materials, gods-in-process, and final products. Inventories have been considered as the most illiquid among all current assets because it takes a long process before it is converted into cash. If the inventories were raw materials, they must be converted into final products, sold, become accounts receivable, then collected and converted into cash. Hence, inventories take longer than accounts receivable to be converted into cash.

Prepaid expenses are those that the company ...

Solution provided by:
Elisa Valdez, PhD
Education
  • Bachelor of Science in Business Administration, University of the Philippines
  • Master in Business Administration, Saint Mary's University
  • Doctor of Philosophy in Education, University of the Philippines
  • Doctor in Business Adminstration (IP), Polytechnic University of the Philippines
Recent Feedback
  • "Excellent information thanks for the input"
  • "Thank you"
  • "Very thorough and informative. Thank you."
  • "Good response. Very detailed"
  • "This solution is excellent. Thank you"
Purchase this Solution
Free BrainMass Quizzes
Transformational Leadership

This quiz covers the topic of transformational leadership. Specifically, this quiz covers the theories proposed by James MacGregor Burns and Bernard Bass. Students familiar with transformational leadership should easily be able to answer the questions detailed below.

Lean your Process

This quiz will help you understand the basic concepts of Lean.

Understanding the Accounting Equation

These 10 questions help a new student of accounting to understand the basic premise of accounting and how it is applied to the business world.

Cost Concepts: Analyzing Costs in Managerial Accounting

This quiz gives students the opportunity to assess their knowledge of cost concepts used in managerial accounting such as opportunity costs, marginal costs, relevant costs and the benefits and relationships that derive from them.

MS Word 2010-Tricky Features

These questions are based on features of the previous word versions that were easy to figure out, but now seem more hidden to me.

View More Free Quizzes
Related BrainMass Solutions

  • Current Vs. Noncurrent Asset Or Liability

    A noncurrent asset is something that can't be converted quickly. A machine, land, and other types of property are noncurrent (fixed) assets. The same holds true for liabilities.

  • Accounting Equation

    If the current ratio is 2.2:1, current assets are 33,000, and noncurrent assets equal $55,000, then owners' equity is _____ .(Assume that all liabilities are current). 3.

  • LANDRY'S RESTAURANTS, INC.

    Some of the key components of financial statements are:  Current Assets: Cash and Cash Equivalents, Accounts receivable, Inventories and Other Current Assets.  Non Current Assets: Property and Equipments, Goodwill and Other assets

  • Financial statement effects of buying non-current assets

    Think debit non-current asset, and credit either cash or debt. ? Which accounts are affected by the utilization of (depreciation) noncurrent assets?

  • Some Accounting for Investments

    and liabilities into current and noncurrent, trading securities are considered current assets by generally accepted accounting principles; hence, transactions related to these assets must be accounted for as such.

  • What are Current and noncurrent assets and liabilities:

    364338 What are Current and noncurrent assets and liabilities: Current and noncurrent assets. o What are current assets? o What are noncurrent assets? o What differs between current and noncurrent assets? o What is the order of liquidity?

  • Analysis of Balance Sheet

    Current assets should be: a. $99,000 b. $96,000 (sum of their current assets + plus excess cost since both inventory and goodwill form a part of current assets) c. $90,000 d. $79,000 9.

  • Ratio calcuation

    The ratios calculated above can be grouped into liquidity and solvency ratios. The liquidity ratios are current ratio and free cash flow and solvency ratios are Debt to Total Assets and Times Interest Earned.

  • Compare and contrast current and non-current assets

    - What differs between current and noncurrent assets? The major differences, between current and non-current assets, are according to timing and physical representation.

View More Related Solutions