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.

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