Glossary · Accounting & Audit
Current Assets
Assets expected to be converted into cash, sold, or consumed within 12 months from the reporting date.
Current assets include cash and bank balances, trade receivables, inventories (raw material, work-in-progress, finished goods), short-term investments, prepaid expenses, and other current assets. They are listed in the balance sheet in order of liquidity. The quick ratio and current ratio use current assets to assess short-term solvency. The standard requires a 12-month or operating-cycle threshold (whichever is longer).
Examples
Inventory of finished goods worth ₹50 lakh, debtors of ₹30 lakh, and bank balance of ₹20 lakh = current assets of ₹1 crore.