Current Asset
Definition
A current asset is an asset expected to be used or converted to cash within one year. Cash, Accounts Receivable, and inventory are common current assets.
Example
Northstar Creative has $8,500 in checking and $2,400 in Accounts Receivable. Both are current assets because they will be used or collected within a year.
Why It Matters
Current assets help the business owner understand what is available in the short term to pay bills and cover expenses.