Financial Statements — Account STD 11 Commerce — Question

1. Current Assets: Current Assets are those which are either in the form of cash or can be easily converted into cash within one year of the date of Balance Sheet. In the words of Hovard & Upton:

'The Current Assets are usually defined as those assets which are convertible into cash through the normal course of business within a short time ordinarily in a year.'

Current Assets include Cash, Bills Receivable, Short Term Investments, Debtors, Prepaid Expenses, Accrued Income, Closing Stock etc. While valuing these assets, Closing Stock is valued at cost or realisable value whichever is less and a reasonable provision for doubtful debts is deducted out of Sundry Debtors.

2. Non-Current Assets: Non-Current Assets are those which are acquired for continuous use and last for many years such as Land and Building, Plant and Machinery, Motor Vehicles, Furniture etc. According to Finney and Miller:

“Non-Current Assets are assets of a relatively permanent nature used in the operations of business and not intended for sale”.

As the purpose of keeping such assets is not to sell but use them, changes in their market values are ignored and these are always shown in the Balance Sheet at cost less depreciation.