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
It's the end of the tax return as we know it! Find out about HMRC’s Making Tax Digital plan and how it will affect you with our free guide.
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.