current asset/liabilites

louiselouise Feels At HomePosts: 49Registered
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???????

Comments

  • columbiacolumbia Experienced Mentor Posts: 580Registered
    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
  • louiselouise Feels At Home Posts: 49Registered
    why is a prepayment an asset, i would think its an expense
  • wonderwife2008wonderwife2008 Feels At Home Posts: 41Registered
    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.
  • numberjunkynumberjunky Feels At Home Posts: 88Registered
    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?
  • vishavisha Well-Known Posts: 218Registered
    agreed
  • PrimblePrimble Experienced Mentor Posts: 734Registered
    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 FlowerSpring Flower New Member Posts: 14Registered
    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:
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