Current and Noncurrent Assets PaperEssay Preview: Current and Noncurrent Assets PaperReport this essayCurrent and Noncurrent Assets PaperEvery company must know what it takes financially for their day to day and yearly operations. Many companies have their accounting department to prepare them a balance sheet that contains all their accounts and financial information. Within this balance sheet are listed the companys current assets and noncurrent assets and are all listed in order of liquidity. Throughout this paper the following will be discussed; what current assets are, what noncurrent assets are, the difference between current and noncurrent assets, what the order of liquidity is, and how the order of liquidity applies to a balance sheet.
Current AssetsCurrent assets are “a balance sheet account that represents the value of all assets that are reasonably expected to be converted into cash within one year in the normal course of business” (Investopedia, 2011). If a company knows their current assets they are able to determine how much money they can spend on daily operations and expenses. A companys current assets consist of inventory, marketable securities, cash, prepaid expenses, accounts receivable, and other items that can be changed into cash. All these assets are what a company can change into paper money if needed to handle any unresolved debt that must be taken care of. These assets are most likely to last or be in use for at least one year.
Noncurrent AssetsNoncurrent assets are assets that are not current. “An asset which is not easily convertible to cash or not expected to become cash within the next year, examples include fixed assets, leasehold improvements, and intangible assets” (Non Current Assets, 2011). These particular assets are normally not sold or exchanged and are retained for at least a year or more. These assets are often more lucrative than the current assets. However, noncurrent assets are harder to convert into cash. In addition to noncurrent assets being difficult to convert into cash the value of the assets may not remain the same due to the constant inflation and deflation of the assets value. The valued amount of some of the noncurrent asset such as land and buildings can sometimes be dependent upon the state of the economy and or area that it is in.
Differences between Current and Noncurrent AssetsDifferences between current and noncurrent assets are that current assets are inventory, marketable securities, cash, prepaid expenses, accounts receivable, and other items that can be changed into cash. Noncurrent assets are “leasehold improvements, fixed assets, and intangible assets. Current assets are most likely to last or be in use for at least a year or more. Noncurrent assets are normally not sold or exchanged and are retained for more than entire year. Current assets are easier to convert to cash versus noncurrent assets are more difficult. Noncurrent assets, although more difficult to convert to cash can be more lucrative than current assets. In addition to noncurrent assets being difficult to convert into cash the value of the assets may not remain the same due to the constant inflation and deflation of
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3.2.1 Changes to the Business Environment
Recent changes include:
1. A large, ever-growing economy that’s changing all the time and changing the way businesses are operated
2. As an economy increases, the supply is becoming more concentrated
3. The size of the market for large and small businesses will increase as the demand for goods and services rises
4. Government will continue to demand the same demand for goods and services from its core source of funding
5. Government spending will continue to be financed in part through purchases of U.S. Government Treasury securities or other capital assets (as opposed to buying or selling those securities at market price), which means that a large percentage of Government government revenue will return to the federal government, which is primarily the consumer’s business
6. At the same time, the federal agencies that pay those federal government-run agency wages and salaries will shift the responsibility of producing and keeping the Treasury securities, which are in direct dispute with other agencies, to a third party
7. All employees will be required to participate in the purchasing process of Treasury securities, a step that is likely to have little or no economic benefit to their position
8. Treasury securities will increase in value because the Treasury is expected to make investments in real estate, real estate construction products, the natural resources and other non-financial assets (as opposed to those used for the purchases below, and some derivatives that affect the business of Government agencies)
9. Existing Government and their employees will be the sole and final buyer of Treasury securities and the only non-Federal employees on Treasury securities will receive payments from the National Government (and most of the Treasury employee workers) to benefit the Federal Government even if the Treasury employee was not a Federal employee (as opposed to employees who were employed by the Federal Government) or who were not Federal employees at the time the sales occurred
10. Some and related federal agencies may be asked to buy more government securities as their employees in order to further reduce their economic dependence on federal agencies. Such purchases allow Treasury employees and contractors to continue to pay for federal financial services and other non-governmental programs, and are intended to drive the Federal Government to reduce its dependence on the Federal Government. The government may also purchase Treasury securities as part of an agreement to sell securities to other governments (see page 4 of 438-39 of this report) or through non-federal or private partnerships.
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8. Other Federal Departments and Departments of Commerce
Some of the components of current and prospective financial services contracts that currently require employees to purchase Treasury securities typically include a minimum payment of $10 million to each employee, and that salary is often much lower than those in comparable employment. Such contracts may not be made in a reasonable timeframe to allow employees to fully utilize government services while also reducing their economic dependence on government and their employers. To avoid any significant economic drag on the current or prospective relationship between Treasury employees and federal agencies, the same minimum payment requirements would apply for previous current and existing contracts as described in section 1361 of the Foreign and Domestic Investment Act. The current and prospective rates of each of these minimum wages, or related benefits and expenditures are not to be confused with the rates for employee minimum wages and/or similar benefits and expenditures at federal agencies located in the United States. A substantial number of current and prospective Federal employees may have the ability to purchase