Current Asset

Business, Legal & Accounting Glossary

Definition: Current Asset

Quick Summary of Current Asset

An asset that is expected to be converted into cash within the trading cycle.

What is the dictionary definition of Current Asset?

Dictionary Definition

current asset is an asset that is expected to be converted into cash or have all of its benefit realized within one year. Examples include cash (duh), accounts receivable, and prepaid expenses. The total is used as the numerator in the current ratio metric.

Full Definition of Current Asset

In accounting, a current asset is an asset on the balance sheet which is expected to be sold or otherwise used up in the near future, usually within one year, or one business cycle – whichever is longer. Typical current assets include cash, cash equivalents, accounts receivable, inventory, the portion of prepaid accounts which will be used within a year, and short-term investments.

On the balance sheet, assets will typically be classified into current assets and long-term assets.

The current ratio is calculated by dividing total current assets by total current liabilities. It is frequently used as an indicator of a company’s liquidity, its ability to meet short-term obligations.

Cite Term

To help you cite our definitions in your bibliography, here is the proper citation layout for the three major formatting styles, with all of the relevant information filled in.

Page URL
Modern Language Association (MLA):
Current Asset. Payroll & Accounting Heaven Ltd. September 25, 2021
Chicago Manual of Style (CMS):
Current Asset. Payroll & Accounting Heaven Ltd. (accessed: September 25, 2021).
American Psychological Association (APA):
Current Asset. Retrieved September 25, 2021, from website:

Definition Sources

Definitions for Current Asset are sourced/syndicated and enhanced from:

  • A Dictionary of Economics (Oxford Quick Reference)
  • Oxford Dictionary Of Accounting
  • Oxford Dictionary Of Business & Management

This glossary post was last updated: 4th August, 2021 | 26 Views.