Question

is an asset current or not? is a liability current or not?

Answer 1

Assets:

An asset is nothing but a resource that an individual, business, or a corporation possesses with the intention of it being helpful to him in the generation of some future benefit. These assets have economic values.

The most common types into which they are classified are: Current assets, Fixed assets, Intangible assets

Currents assets: These are highly liquid assets which can be converted into cash within one year. These form part of daily business operations of the entity. These include accounts receivable, cash & cash equivalents, Inventory, prepaid expenses, notes receivables, short-term investments, etc.

While Fixed assets are tangible in nature, that are acquired in the business with the intention of using them for the long-term (Not less than a year) in the business for production purpose. These are not meant to be sold immediately but are invested in the business for generating economic benefits for long term. These include plant & machinery, building, land, equipment, etc.

Intangible assets are not physical in nature & include patents, trademark, goodwill, franchisee, etc.

Liabilities:

These are the legal obligations which company has to settle over a period of time. These arise during the day to day operations of business & involve transfer of economic benefits in order to settle them. These can be classified into Current Liabilities & Long term liabilities.

Current  Liabilities: These are required to be paid within one year & include accounts payable, interest payable, salaries payable, sales tax payable, accrued expenses, etc.

While Long term liabilities have maturity period longer than one year. These include Mortgage loan, Bonds payable etc.