In general, current assets are all company assets that can be sold, consumed, used, or spent by the company in accordance with company regulations. In managing assets, companies can use asset management systems to analyze asset costs for wiser asset decision-making. Asset value can be converted into cash for one year ahead. Calculation of current assets is one of the elements that must be included in the company’s balance sheet. These are assets that can be easily exchanged or liquidated through cash transactions. We can conclude that these assets are easy to cash because current assets can be liquidated with cash in less than a year.
Because the current assets statement includes all assets and resources that can be converted into cash in the short term, it is in the form of cash. Get maximum control over your assets with HashMicro Asset Management Software. We can offer the best Asset Management System for your business. However, our products can help you track your asset usage, schedule your maintenance, calculate ROI & expenses, and find out the value of your assets automatically. This is why current assets are also a company’s liquid assets. Read further below for more information on the different types of current assets.
Table of Content:
Table of Content
Current Asset Type
Bank cash and cash equivalents
The bank balance is the current asset owned by the company. Companies can use this type of asset whenever they need funds to maintain other company assets.
While cash equivalents such as foreign currency, checks, petty cash, checks that are not deposited by customers, and other examples of the form of current assets.
Debtors and Accounts Receivable
Obviously, in business, the trading cycle or operating cycle plays an important role in the company. Companies must collect money from customers who are in arrears on inventory payments so that they can maintain their finances. Debtors and receivables will determine how many future inflows will be and the company’s ability to pay its obligations. We also offer an ERP System for the Financial Sector from HashMicro to automate your daily business operations and optimize the fulfillment of your client’s needs in a real-time platform. Our Financial ERP system consists of a variety of enterprise-class solutions that can be customized to meet the unique needs of the financial services industry. We can help you improve your customer management and project management, improve your sales and HRM system, and also manage your finances accurately.
Inventory or stock In Trading
Inventory is at the heart of every trading-enabled company. All cash flows and sales depend on the availability of supply and demand. While inventories in trade include raw materials, work in process, or finished goods, based on the nature of the business and customer needs.
In addition, in managing inventory or stock in trade, companies can use the help of HashMicro’s inventory management system which is able to optimize inventory levels, monitor stock transfer processes, estimate inventory requirements, and streamline stock management at each trading location.
Deposit
A bank deposit or time deposit is an amount of money in the form of a time deposit that can be withdrawn at another time after one month, 3 months, 6 months, or others.
Marketable Securities
There are various securities available in the market and ready to be converted into cash. The purpose of owning securities is to take advantage of idle cash.
Prepaid expenses
Oftentimes, companies pay upfront to ensure that they get the appropriate service or product from the vendor. Therefore, they hope to run their business smoothly.
Since the upfront cost is not the amount of the fee at the time it is paid, the amount of money still counts as an expense in the next period.
Accrued income
It is important to collect money from debtors in the cycle of business operations. However, when payments are due, often the money is not returned.
Promise notes
In various business contracts, sometimes companies need funds. However, when the company’s finances are scarce, it can delay payment of the contract by submitting a promissory note.
Other Receivable Income in the Next 12 Months
Current assets include several other inflows from every business transaction. However, the calculation must be on the books within one year. Examples of these other receivables income are taxes, employee advances, etc.
Conclusion
Those are the types of current assets. However, the total amount is the sum of the values of the types of assets currently owned by the company, which contributes to the total assets calculation.
This calculation will be useful for analyzing the company’s solvency ratio and its ability to face future liabilities. In addition, when companies apply for loans or other credit facilities, the number of current assets will be taken into consideration.
Therefore, HashMicro provides Accounting Software to help you automate the calculation of your current assets. With this accounting system, you can easily record and keep a list of your current assets. You can generate reports in just a few clicks.
For more information, you can visit our website or discuss it with our software experts here and contact us.
Also Read: 10 Best Accounting Software for Business in Singapore
