Current Assets Examples & Types
Current assets are cash or cash and equivalent or the assets that can be easily liquidated in the market and mature within 12 months from the reporting date. Below are the top examples of Current Assets –
- Cash/Bank and Cash Equivalents
- Debtors/Trade Receivables
- Readily Marketable Securities/Available for Sale Securities
- Stock-in- Trade/Inventory
- Prepaid Liabilities
- Income Receivable/Accrued but not Received
- Bills/Promissory Notes
- Other Receivables Getting due in 12 Months
Let us understand these in detail –
#1 – Cash/ Bank and Cash Equivalents
Cash and bank balances are the most liquid assets that the company can have. It can be readily utilized wherever they want and help in maintaining the solvency of the company. Also, Cash equivalent like foreign currencies, checks, petty cash, undeposited checks received from customer etc also forms part of current assets only.
#2 – Debtors/Trade Receivables
In the day to day business, trade cycle plays the most important part. Also known as an operating cycle, in that to recover the funds from the customers is the important task a business person has to play in order to maintain the adequate availability of the funds. Such debtors or trade receivables will help in determining the future cash inflows that corporate will be having and its ability to repay its liabilities.
#3 – Readily Marketable Securities/Available for Sale Securities
There are various readily available market securities like bonds, Treasury Bills etc that have a readily available market. As these are risk-free instruments, customers will be always available to purchase this security at any point in time. Such securities will form part of available for sale category of investments or instruments.
#4 – Stock-in- Trade/ Inventory
Inventories are the heart of the business with the help of which all trades become possible. All cash flows and sales will be dependent on the availability of the Stock in trade and demand of the same in the market. Stock in trade may be in the form of raw materials, work in progress or finished goods, based on the nature of business and requirement of customers.
#5 – Deposits
Deposits may be in form of safety deposits with the vendors or suppliers gave as security, having tenure less than 12 months or the term deposits of less than 12 months placed in the banks. As such deposit will help in securitizing the liquid cash into the safest mode of investment
#6 – Prepaid Liabilities
Business houses many times payout a few liabilities well in advance to ensure the service from the vendors. By making this payment, they will receive uninterrupted service of the vendors and will be able to maintain the smooth running of the business. Such advance prepaid liabilities who is getting accrued in the next 12 months and getting paid in advance will be considered as current one.
#7 – Income Receivable/ Accrued but not received
As a part of routine business operations, in the operating cycle, as discussed above collection of debtors is an important part. However, as and when it is getting due, it is not always possible that funds will be adequately collected as and when it is getting due. Customer may ask for additional credit to make the payment of the same. Such receivables which are due but yet to be collected will also form part of current assets examples (accrued income)
#8 – Bills/Promissory Notes
Under a various business contract, many times there exist need of fund. In such scarcity of the funds, a businessman can raise the funds by writing the promissory notes or can give fund to the other person who is having need of such fund.
#9 – Other Receivables getting due in 12 months
There can be numerous kind of fund inflow getting due as and when business transactions take place and based on the same, such cash flows are to be booked in the books of account by considering their nature and surety of recoverability. Examples of such inflows can be Tax Refund for various taxes like income tax, etc, Advances took by employees, proceeds to come from the insurance claim etc.
From the above we can say that:
Walmart Inc Example
Walmart Inc has a Cash balance of $ 6756 Mn, Trade Receivables of $ 5614 Mn, Inventories of $ 43783 Mn, Prepaid Expenses of $ 3511 Mn as on 31st Dec 2018.
We can calculated total Current Asset= $ 6756 Mn +$ 5614 Mn + $ 43783 Mn + $3511 Mn
= $ 59664 Mn.
Thus, Walmart Inc has Current Assets Worth $ 59664 Million as on 31st March 2018.
Amazon.com, Inc has a Cash balance of $ 19334 Mn, Marketable Securities of $ 6647 Mn, Inventories of $ 11461 Mn, Account Receivables of $ 8339 Mn as on 31st Dec 2018.
we can calculated total Current Asset= $ 19334 Mn +$ 6647 Mn + $ 11461 Mn + 8339 Mn
= $ 45781 Mn.
Thus, Amazon.com, Inc has Current Assets Worth $ 45,781 Million as on 31st March 2018.
These type of Current Assetisre considered as the lubricant for the fixed assets which will help in generating the revenue. Current assets are used in Current Ratio, Liquid Ratio, Quick Ratio, Cash Ratio etc. to analyze the short term solvency of the company and its ability to meet up the arising liabilities. Moreover, Current asset will be duly considered while verifying the collateral securities that can be given for taking borrowings or any other kind of credit facilities.
This has been a guide to Current Assets Examples. Here we learn the top 9 types of Current assets with examples including Walmart Inc & Amazon.com. You may learn more about financing from the following articles –
- What is Surety Bond?
- Purpose of Issuance of Treasury Bills
- Examples of Marketable Securities
- Intangible Assets | Top 4 Examples
- Financial Assets | Top 13 Types
- Types of Assets in Accounting
- List of Assets in Accounting
- Intangible Assets in Accounting
- Financial Assets on Balance Sheet
- What is Asset Accounts?