Current Assets and Current Liabilities Homework Answers

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What are current assets?

These are important aspect that ensures the proper functioning of a business as it is used to pay for daily operations and ongoing expenses. On the balance sheet, it is represented in the order of liquidity that is how easily each asset can be converted into cash.

Example of current asset:

Current assets and current liabilities homework answers can illustrate better with examples. These are:

  • Inventories including raw materials
  • Accounts receivables
  • Prepaid expenses
  • Cash balance
  • Sundry debtors
  • Bonds, mutual funds, etc, any investment that can be sold in a year.

What are current liabilities?

Current liabilities are the debts which the company owes to its creditors within a term of one year. It turns to cash current assets to pay off such debts. Oftentimes, companies need loans to invest in some new business or products. These in turn into liabilities. These liabilities which are due to be paid off within a year are recorded as current liabilities on the balance sheet.

It uses current ratio and quick ratio to decide whether a company can pay off its existing liabilities within the year stipulated.

Example of current liabilities:

Current assets and current liabilities assignment answers guides students ably. With necessary examples, understanding it becomes easier. Some examples of current liabilities include:

  • Account payable
  • Short term loans
  • Bank loans
  • Creditors
  • Accrued expenses
  • Unearned income
  • Interest, tax and dividend payment

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