Yes, cash is a current asset for accounting purposes. Current assets are any assets that can be converted into cash within a period of one year. This counts products that are sold for cash as well as resources that are consumed, used, or exhausted through regular business operations that are expected to provide a cash value return within a single year. Cash and cash equivalents are the most liquid of assets, making them more “current” than all other current assets. Cash of course requires no conversion and is spendable as is, once withdrawn from the bank or other place where it is held. Cash equivalents, such as certificates of deposit, are any type of liquid securities that are not in the form of cash currently, but that can be converted to cash instantly.
Is Cash a Current Asset? FAQs
Yes, cash is a current asset for accounting purposes.
Current assets are any assets that can be converted into cash within one year.
Cash and cash equivalents are the most liquid of assets, making them more “current” than all other current assets.
Cash requires no conversion and is spendable as is, once withdrawn from the bank or other place where it is held.
Yes, in certain cases cash can be held long-term if a company has enough funds to cover its short-term obligations and has no plans to use the funds shortly. In such cases, the cash is classified as an investment on the balance sheet.
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.
