current asset/liabilites

louise

i know i shoud know this by know, but a can distinguish each

i dont know how to place costs appropriately when doing the balance sheet, could anyone please help my by giving me tips, on knowing what goes where.

what goes under current liabilites, and under current assets???????

columbia

Hi Louise

Items listed in the above catagories relate to assets and liabilities due in under a year.

The following may be found;

Current Assets; Stock/Debtors/Bank & Cash/Prepayments

Current Liabilities;Creditors/NI&Paye/Bank Overdraft/VAT/Accruals

Hope this this is of some assistance.

Tracy

louise

why is a prepayment an asset, i would think its an expense

wonderwife2008

Prepayments are part of cost matching ie, all costs should be shown in the accounts for the yr to which they are apply.

In the case of a prepayment you are reducing the cost of the expense in the current yr ie, cr cost in profit and loss dr prepayments b/s and then you will journal it out in the balance sheet in the next yr to which it applies cr prepayments dr cost in p&l. It's an asset because it is money that although physically spent it has not been spent in the current yr if that makes sense.

numberjunky

Prepayments

I was taught that a prepayment is an asset because you have paid for something in advance, and that service or commodity is owed to YOU. So anything that is owed to you is an asset - as in DEBTORS

Anyone agree with this explanation?

visha

agreed

Primble

I agree,

I've always rememebred it that an asset is a good thing and i like them just like i like to recive money. i dont like spending money so its a liability

Spring Flower

Hi

current assets are short term assets and thats why is called liquid assets.
for instance debtors, cash at bk, closing stock, prepayments etc....
be'coz you know in near future you can recvd your money from debtors or selling cl stk.

similarly curr liabilities is short term liab. for instance creditors, provision for doubtful debts, provision for tax, general reserve, outstanding exp, bank overdraft, etc.....

in the b/sheet when you (-) cur liab from cur asstes = working assets or net assets.

any futher question relating to above, let me know.:thumbup: