CURRENT ASSETS, also known as liquid, quick, working, or floating assets, are assets consisting of cash and other items which can readily be converted into cash without serious deprecia tion in values. Ordinarily this group of assets includes cash, ac counts receivable, notes receivable, accrued interest receivable and merchandise inventories. It is generally assumed that current assets will be converted into cash during the current operations of the business. Usually this will occur within from three months to six months following the date of the accounts, although in some cases an entire year might be required. While some con cerns, notably those that manufacture repair parts, have a suffi cient stock of such parts to last for a three to five year period; it is customary even in such instances to include these valuations in the inventory accounts. The amount involved in the inventory of the repair parts is usually small as compared with the inventories of finished products, work in process and raw materials. In the preparation of the balance sheet of an organization, current assets are usually listed first. It is to these assets that current creditors of the business must look for satisfaction of their claims. Again, if the balance sheet is to be used for credit purposes, the prospec tive creditor will be most interested in this group of assets so that he may reasonably determine the ability of the debtor to discharge his obligation at maturity.
Net current assets is a term used to signify the excess of cur rent assets over current liabilities. (G. L. C.)
