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What are current assets - Current and Non-Current Assets...

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Current and Non-Current Assets Paper What are current assets? What are non-current assets? What differs between current and non-current assets? What is the order of liquidity? How does the order of liquidity apply to the balance sheet? Talking about current assets, non-current assets and what differs between them. The order of liquidity and how that order applies to the balance sheet in these businesses today. The six principles of internal control are: establishment of responsibility, segregation of duties, documentation procedures, physical mechanical, and electronic controls, independednt internal verification, and other controls. Current assets are items on a balance sheet. According to Investorwords, current assets equal “…the sum of cash and cash equivalents, accounts receivable, inventory, marketable securities, prepaid expenses, and other assets that could be converted to cash in less than one year,” (2008). If a company goes bankrupt, current assets are easily liquidated. Additionally, current assets are a source of funds for most companies. The importance of current assets to businesses is that these assets fund daily operations and expenses. Not only are current assets expected to be turned into cash, they many be sold, or consumed within a year. By contrast, non-current assets are not “…easily convertible to cash or not expected to become cash within the next year,” (Investorwords, 2008) Small and medium-sized businesses rely on a steady, consistent stream of incoming cash (for us cash/check) equals the samething – customers paying for goods and services with cash, checks, and credit cards. Many retail and service businesses have multiple people conducting cash
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transactions throughout the day. Creating a cash policy and cash procedure for important cash handling processes like cash drawer management, end of day closing, or cash in deposits, can be vital to protecting the life blood of your business.
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