| Current | Non-current | |
| Asset | – assets that are likely to be converted into cash up within 1 year or operating cycle- Presented in order of liquidity- Reveal operating activities | – Assets that are not converted to cash within 1 year or operating cycle- Reveal firm’s investing activities that forms foundation upon which the firm operates |
| Liability | – Obligation that will be satisfied within one year or operating cycle- Settlement is expected during normal operating cycle and within one year- For trading purpose- No unconditional right to defer settlement for more than 1 year | – Provide information on firm’s long term financing activities |
- Working capital
- Current assets – current liability
Note
- Noncurrent asset
- company’s long-term investments for which the full value will not be realized within the accounting year
- Operating cycle
- Time to produce or purchase inventory, sell and collect the cash
- Debt settlement
- approach to debt reduction in which the debtor and creditor agree on a reduced balance that will be regarded as payment in full.