Question
In my class we are being asked to post responses to questions others have answered. Below is the what I need to respond to. Any
In my class we are being asked to post responses to questions others have answered. Below is the what I need to respond to. Any help you can give me would be appreciated. I am also being required to post a reference with this so if you could help with a reference that would be great. Thank you so much!
Class, Current assets are Current assets include all the items the business owns that can easily be converted to cash within a years time(ONeil, 2017) This includes things like the amount of cash on hand, inventory that is owned, accounts payable. Long term assets are typically larger investments such as property, machinery, equipment specific to the type of business. These investments are simply not as easy to liquidate as items listed in the current assets section, they also lose value over time. Current liabilities are balances on credit cards, small bank notes as well as what will be owed on larger notes within the next year. If youve borrowed money from a bank or mortgage broker, the loan will show up in two places the amount due within one year will show up in current liabilities, and the amount due after one year will show up in long-term liabilities (ONeil, 2017). Long term liabilities are considered as large loans that will still be due after one year, as well as other ongoing financial obligations such as pension programsetc. I think it is important for assets as well as liabilities to be distinguished between these two categories because it separates what is the most current in terms of what will be due this year, versus what the company knows they already have the funds to pay. When a company knows what money, they will need to bring in over the next year, they can better build a budget. When a company also knows exactly what notes will take more than one year to pay off then they can develop a detailed financial plan going forward and determine what long term assets will hold up their liabilities as well as make more accurate decisions on future investments.
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