Current/non-current asset/Liability

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


  • 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.