Finance and Management – 4

Current Assets and Current Liabilities

Continuing our discussion from the earlier blog on Balance sheet, in today's blog we have a look at two sections - Current Liabilities and Current assets.

A look at the balance sheet and we generally see items under the title Current Assets and Current Liabilities. Why are these called current? A look at the nature of the sub-items would give us an understanding of the same.

Current Assets generally have items like - Cash, Accounts Receivable, and Inventory etc. Current Liabilities has items like Accounts payable, Notes Payable.

All these items get converted from one form to another or change hands within one business cycle (may be an accounting year) or shorter. Hence they are termed current - meaning have to be processed in the current business year.

Read in Kannada:

http://somanagement.blogspot.com/2011/07/blog-post_20.html