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Accounting & Tax vocabulary · Assets, Liabilities & Equity

Current asset

Meaning in accounting & tax, with examples

nounCore term

In accounting & tax, current asset means: An asset that is expected to be turned into cash, sold or used up within one year, such as cash, receivables, inventory and prepaid expenses.

In Turkish: dönen varlık

How it is used

Analysts compare current assets with current liabilities to judge short-term liquidity (the current ratio). Working capital is current assets minus current liabilities.

Example sentences

  1. Cash and receivables account for most of our current assets.

  2. Inventory is classified as a current asset because we sell it within a few months.

Common collocations

  • total current assets
  • current ratio
  • other current assets
  • current and non-current assets
  • assetSomething a business owns or controls that is expected to bring future economic benefit, such as cash, receivables, stock, machinery or software.
  • current liabilityA debt or obligation that a company must pay within one year, such as supplier invoices, short-term loans, taxes payable and unpaid salaries.
  • inventoryGoods a business holds to sell, plus the raw materials and unfinished products used to make them. It is a current asset on the balance sheet.
  • accounts receivableMoney that customers owe a company for goods or services it has already delivered on credit, and also the team that collects those payments.
  • fixed assetA long-term physical asset that a business uses to operate rather than to sell, such as buildings, machinery, vehicles or computers.

More terms: Assets, Liabilities & Equity

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This page explains English vocabulary for learners. It is not financial advice.