Current assets are all assets of a company that, in contrast to fixed assets, are only in the company for a short time.
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Definition / explanation
Current assets are part of the assets on the balance sheet. It consists of permanently changing assets. These are intended for short-term sale, repayment, processing or consumption.
The current assets therefore legally represent the residual amount that is not below the Capital assets falls. These assets go through business processes such as procurement, sales or production. Materials become finished products, these in turn are sold and thus become receivables and after payment into cash in the company.
It is expected that the capitalized asset items will become cash within a turnover period or perish on sale.
Components of current assets
1. Inventories / inventories:
- Operating, raw or auxiliary materials
- unfinished services and products
- advance payments made
- Goods and finished products
2. other assets and receivables
- Receivables from services or deliveries
- Claims against affiliated companies or companies with an existing participation relationship
- other assets, e.g. open invoices
- own shares or shares in affiliated companies
- other securities
4. Cash and cash equivalents
- Cash on hand
- Credit balances at credit institutions or at the Bundesbank
- Postgiro credit
Valuation of working capital
Since the current assets Lowest value principle applies, must be depreciated according to the fair value or the daily value, should these be lower. However, if this is not a permanent decrease in value, the tax balance sheet may not be depreciated.
Likewise, increased values must be attributed again. In certain cases, according to IFRS and US-GAAP, values higher than the manufacturing and acquisition costs may be used. This applies, among other things, to certain precious metals and securities.