#current asset

I. Multiple Choice QuestionsChoose the Correct Answer Question 1.A prepayment of insurance premium will appear in ………………(a) The trading account on the debit side(b) The profit and loss account on the credit side(c) The balance sheet on the assets side(d) The balance sheet on the liabilities sideAnswer:(c) The balance sheet on the assets side Question 2.Net profit is ………………(a) Debited to capital…

I. Multiple Choice QuestionsChoose the Correct Answer Question 1.Closing stock is an item of ……………..(a) Fixed asset(b) Current asset(c) Fictitious asset(d) Intangible assetAnswer:(b) Current asset Question 2.Balance sheet is ……………..(a) An account(b) A statement(c) Neither a statement nor an account(d) None of the aboveAnswer:(b) A statement Question 3.Net profit of the business increases the…

In this article, we are going to discuss about, Current Assets and Its Importance.

Definition: Current Asset are assets that you currently have like cash, cash-equivalents, short term investments such as stocks.

Detail Explanation:

Current Assets can be sold or converted into cash within a period of one year and is highly liquid. If this asset is highly liquid then you can easily access this without worry.

Personally current assets should be highly liquid because in case of sudden problems you can easily use it and be easily accessible. It is wise to build first more current assets than fixed assets.

Current Asset like cash is usually preferred to be put in the bank because it can be easily use. Same as for cash equivalents, short term investments and stocks.

Most of us used current assets or cash every day to buy for our needs and wants. But most importantly is the needs in order for us to survive. If all of your assets is fixed then it would be very difficult because it is not liquid.

Our investments such as stocks can be converted into cash also but it does depend on the bank clearing of how many days it would be but it is not beyond one year of course. I have my recent travel to Hong Kong last month that I got to withdraw some of my mutual fund shares to fund my travel. The process only took me about a week to get the money in cash and it was a big help for me.

Right now I am building my emergency fund in a bank which can be easily converted into cash within a day so if in times of sudden emergency like the repair of my laptop I can easily withdraw the money and use it for the repair. I am not spending much on wants and if I buy something I always prefer to pay in cash rather than using a credit card.

At the end of the day it’s still up to you on how to manage your finances very well.

PART I – Format of BALANCE SHEET

Name of the Company…………………….

Balance Sheet as at ………………………

ABC PVT. LIMITED Balance Sheet as at 31st March, 2013 Particulars Schedule 31.03.2013 31.03.2012 I. EQUITY AND LIABILITIES (1)…

PART I – Form of BALANCE SHEET

Name of the Company…………………….

Balance Sheet as at ………………………

  XYZ PVT. LIMITED Balance Sheet as at 31st March, 2012 Particulars Schedule Figures as at the end of 31.03.2012 Figures as at the end of 31.03.2011