Current Assets: The term ‘Current Assets’ includes assets which are acquired with the intention of converting them into cash during the normal business operations of the company.
The broad categories of current assets, therefore, are
- Cash including fixed deposits with banks.
- Accounts receivable, i.e., trade debtors and bills receivable,
- Inventory i.e., stocks of raw materials, work-in-progress, finished goods, stores and spare parts.
- Advances recoverable, i.e., the advances given to supplier of goods and services or deposit with government or other public authorities, e.g., customer, port authorities, advance income tax, etc.
- Pre-paid expenses, i.e. cost of unexpired services e.g., insurance premium paid in advance, etc.
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