Question

Which assets are included in current assets?

Hint:

Current assets are vital for maintaining liquidity and short-term solvency.

Answer 1

Step 1: Definition.
Current assets are assets that are expected to be converted into cash or used up within one accounting year.
Step 2: Examples of current assets.
1. Cash and cash equivalents
2. Accounts receivable (debtors)
3. Inventories or stock
4. Bills receivable
5. Short-term investments
6. Prepaid expenses
Step 3: Explanation.
These assets ensure smooth business operations and help maintain liquidity by meeting short-term obligations.
Step 4: Conclusion.
Thus, current assets represent the liquid resources of a business that are easily convertible into cash.