A bond may or may not be a current asset depending on its time to maturity. A current asset is any asset that will provide an economic benefit for or within one year. As such, bonds with maturities of a year or less, such as US Treasury Bills, are considered short-term investments and are current assets. Most other types of bonds will stay on a company’s balance sheet for longer than a year, making them non-current assets.
Are Bonds Current Assets? FAQs
Bonds are debt securities that represent a loan agreement between an issuer (borrower) and the bondholder (lender). They obligate the issuer to pay interest on the principal amount of money borrowed over a certain period, typically 10-30 years.
No, bonds are not considered current assets because they do not turn into cash within one year or less.
Current assets include items such as inventory, accounts receivable, and cash that can be converted into cash within one year or less. Long-term investments are typically stocks, bonds, and other securities that have a maturity period of more than one year.
A bond is an agreement between an issuer (borrower) and a bondholder (lender) where the issuer agrees to pay interest on the principal amount of money borrowed over a certain period, usually 10-30 years. A loan is also an agreement between two parties but involves borrowing funds for shorter periods and often with collateral provided by the borrower.
Bonds can be low-risk investments depending on their credit rating, which reflects the ability of the issuer to repay the loan. Generally, higher-rated bonds have a lower risk of default and are considered safer investments. However, any investment carries some degree of risk and should be weighed carefully before making an investment decision.
True Tamplin is a published author, public speaker, CEO of UpDigital, and founder of Finance Strategists.
True is a Certified Educator in Personal Finance (CEPF®), author of The Handy Financial Ratios Guide, a member of the Society for Advancing Business Editing and Writing, contributes to his financial education site, Finance Strategists, and has spoken to various financial communities such as the CFA Institute, as well as university students like his Alma mater, Biola University, where he received a bachelor of science in business and data analytics.
To learn more about True, visit his personal website or view his author profiles on Amazon, Nasdaq and Forbes.
