what is a current asset

A current asset is an item on a companys balance sheet that is either cash, a cash equivalent, or can be converted into cash within one year. Current assets are important to a business because they allow it to pay its day-to-day operating expenses, bills, and loan payments. Examples of current assets include cash, cash equivalents, accounts receivable, stock inventory, marketable securities, pre-paid liabilities, short-term investments, supplies, and prepaid expenses. On a balance sheet, assets are typically classified into current assets and long-term or fixed assets. Non-current assets, also known as fixed assets, are long-term investments that often cannot be turned into cash within a year. Examples of non-current assets include real estate, land, equipment, intangible assets, trademarks, copyrights, and patents.