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A company's creditors will often be interested in how much that company has in current assets, since these assets can be easily liquidated in case the company goes bankrupt. In addition, current assets are important to most companies as a source of funds for day-to-day operations.
For most businesses, the cutoff for classification as current assets is one year from the balance sheet date (Kimmel, Weygandt, & Kieso, 2007). For example, accounts receivable are current assets because the company will collect them and convert them to cash within one year. Supplies is a current asset because the company expects to use it up in operations within one year (Kimmel et al...
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