ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Accounts receivable are considered a current asset because they usually convert into cash within one year. When a receivable takes longer than one year to convert, it will be recorded as a long-term asset. In addition to accounts receivable, there are other current assets found on the balance sheet.

Detailed explanation-2: -Accounting divides your company assets into two classes: current and long-term. Current assets include cash and anything you use up or convert to cash over the next 12 months. Typical examples are supplies or accounts receivable. Anything you plan to keep beyond a year is a long-term asset.

Detailed explanation-3: -Current assets refer to those that are liquid, meaning they can be easily converted to cash in less than a year. Accounts receivable are typically collected in two months or less. For this reason, they are considered a current asset or a “short-term asset.”

Detailed explanation-4: -Fixed assets like property, plant, and equipment, which can include land, machinery, buildings, fixtures, and vehicles. Long-term investments such as stocks and bonds or real estate, or investments made in other companies. Trademarks, client lists, patents. More items