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Current Assets

Current Assets

Current assets are cash, assets that will be turned into cash in less than a year or one operating cycle, and assets that will be used in less than a year or one operating cycle.

Your customers will pay their accounts receivable in less than a year so that is a current asset. Your supplies, prepaid insurance, and prepaid rent will be used up in less than a year so they are current assets. Most companies use a year as their bench mark, but if you make wine that has to age for two years, you might use the time it takes to start and finish a bottle of wine as your benchmark. That would be called one operating cycle.

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