What is a current asset?
Definition of a current asset
A current asset is something your business owns that's expected to turn into cash within a year.
Examples of a current asset:
- If your business sells goods, any stock of goods you hold - for example, books in Amazon's warehouse are a current asset of Amazon's
- Money owed to your business by its customers (otherwise known as 'trade debtors')
- Any cash in the business's bank account
Frequently Asked Questions
What's the difference between a capital asset and a current asset?
A key difference between capital and current assets is that you wouldn't normally expect to have to sell capital assets for cash - you buy them to use in the business, to enable you to make sales - whereas the aim of current assets is to turn them into cash.
Got questions? Ask Emily!
FreeAgent's Chief Accountant Emily Coltman is available to answer your questions in the comments.