Current Assets and Liablities
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- Date Submitted: 12/16/2014 05:13 AM
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Current assets
Current assets are also known as cash equivalents because they areeasily convertible to cash. Current assets consist of Stock, Debtors,Prepayments, Bank and Cash. These assets are used up, sold or keepchanging in the short run.Stock – this refers to the stock of goods available to the business forsale at a given time. It is very important to maintain the right amount of stock of goods for a business. If stock levels are too high it means that toomuch of money is being held up in the form of stock and if stock levelsare too low the business will lose possible opportunities of higher sales.Debtors – are a business’s customers owing money to the businesshaving been bought the business’s goods or service on credit. If abusiness has cashflow problems it can maintain a low level of debtors byencouraging the debtors to pay as early as possible.
Prepayments – these are the expenses paid in advance. Thepayment being made even before the expense occurs is a prepayment.Bank and Cash – Bank is the cash held in banks and cash is moneyheld by the business in the form of cash. Having too much of money inthe form of cash is also not good for a business since it can use thatmoney to invest and earn a return but however a business should havehealthy current ratio (current asset: current liabilities) of 2:1
Current liabilities
Current liabilities are short-term debts that are in immediate needof settlement. Some examples of current liabilities are creditors, accruals,proposed dividends and tax owing. These obligations have to be paid
Current liabilities
Current liabilities are short-term debts that are in immediate needof settlement. Some examples of current liabilities are creditors, accruals,proposed dividends and tax owing. These obligations have to be paid within a year.
Creditors – also known as trade creditors are suppliers from whomthe business purchased goods on credit. Paying the creditors as late aspossible will ease cash flow requirements for...
Current assets are also known as cash equivalents because they areeasily convertible to cash. Current assets consist of Stock, Debtors,Prepayments, Bank and Cash. These assets are used up, sold or keepchanging in the short run.Stock – this refers to the stock of goods available to the business forsale at a given time. It is very important to maintain the right amount of stock of goods for a business. If stock levels are too high it means that toomuch of money is being held up in the form of stock and if stock levelsare too low the business will lose possible opportunities of higher sales.Debtors – are a business’s customers owing money to the businesshaving been bought the business’s goods or service on credit. If abusiness has cashflow problems it can maintain a low level of debtors byencouraging the debtors to pay as early as possible.
Prepayments – these are the expenses paid in advance. Thepayment being made even before the expense occurs is a prepayment.Bank and Cash – Bank is the cash held in banks and cash is moneyheld by the business in the form of cash. Having too much of money inthe form of cash is also not good for a business since it can use thatmoney to invest and earn a return but however a business should havehealthy current ratio (current asset: current liabilities) of 2:1
Current liabilities
Current liabilities are short-term debts that are in immediate needof settlement. Some examples of current liabilities are creditors, accruals,proposed dividends and tax owing. These obligations have to be paid
Current liabilities
Current liabilities are short-term debts that are in immediate needof settlement. Some examples of current liabilities are creditors, accruals,proposed dividends and tax owing. These obligations have to be paid within a year.
Creditors – also known as trade creditors are suppliers from whomthe business purchased goods on credit. Paying the creditors as late aspossible will ease cash flow requirements for...