What are differences between current and non-current assets or liabilities?

3. Examples of current and non-current assets and liabilities

There are a lot of examples of current and non-current assets and liabilities. We will review several so you can obtain understanding of how to categorize them, and then, you can apply the concept to your own situation. Refer to the below table:

Examples of Current Assets:

Cash

Normally, cash is considered a current asset because it can be used within one year after the balance sheet date. However, in certain situations, cash may be classified as a non-current asset. For example, if a company has restricted cash in a bank account (i.e. cash that can't be used), and restriction is for more than one year after the balance sheet date, then, this cash is considered non-current.

Accounts Receivable

Accounts receivable are amounts expected to be collected from customers. Usually, collection is within one year, and thus, accounts receivable are considered a current asset.

Prepaid Expenses

Prepaid expenses (e.g. prepaid insurance premiums) are usually used within a year after the balance sheet date and thus, are considered a current asset. However, if a company paid a premium for two years as of the balance sheet date, then, one half (one year) of the prepaid expenses balance will be current and the other half (another year) will be non-current.

Examples of Non-current Assets:

Fixed Assets

Fixed assets are used (depreciated) by a company for more than a year, and thus, they are considered non-current.

Intangible Assets

Similar to fixed assets, intangibles are used (amortized) by a company for more than a year, and thus, they are considered non-current.

Long-term Notes Receivable

Notes receivable that are not expected to be collected until after one year after the balance sheet date are considered long-term. Note, however, that there are some notes that have a maturity date within a year after the balance sheet date: such notes are classified as current (short-term).

Examples of Current Liabilities:

Accounts Payable

Accounts payables are obligations of a company to vendors, suppliers, etc. Such obligations are normally settled with current assets (e.g. cash), and thus, they are considered current liabilities.

Accrued Expenses

Accrued expenses may include accrued (i.e. incurred but not paid) utility charges, insurance payments, and others. Such accrued expenses are usually paid within a year after the balance sheet date, and therefore, they are considered current liabilities.

Examples of Non-current Liabilities:

Bank Loan

A bank loan that has a maturity date after one year from the balance sheet date is not going to be paid with current assets, and therefore, it is considered a non-current liability. However, if a portion of the loan is due within one year after the balance sheet date, that portion is classified as current liability on the balance sheet and is excluded from the non-current portion of the loan.

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