Question

In my Accounting class we are being asked to respond to/comment on different things that students post. My professor is requiring a "substantive" response with references to back up what is being said. I need some help with a responses to these posts. Any help you can give me will be GREATLY appreciated! I am WAY out of my knowledge base in this class.

The difference between current and long-term assets and liabilities is that current will be paid sooner and long-term will be paid at a later time. when it comes to current assets this refers to assets that will be converted into cash within one year. Long-term assets refer to any other asset that will be converted after a year. Current liabilities are amounts that need to be paid to the creditors within the year. Long-term liabilities are amounts that can be paid after the year. It is important for assets and liabilities to be distinguished in terms of current and long-term so that the company knows what needs to be paid right away and what can wait for it to be paid in the future. If a company does not distinguish what needs to be paid or converted into cash within the year (current assets/liabilities) they can lose track of important dates that need to be fulfilled.

Assets and liabilities are like oil and vinegar, black and white, yin and yang – they are opposites. An asset is defined as something that is owned, such as cash or accounts receivable. On the other side of the spectrum is the liability, which is an obligation, something that is owed. A current asset is an asset that the company expects to covert to cash within a year (Assets vs Liabilities: Top 9 Differences (with Infographics) 2020). Long- term assets cannot be converted to cash immediately, but they do provide long-term benefits. Similar to assets, current liabilities are obligations that are expected to be paid within a year with long-term debt/liabilities being obligations to be owed outside one year (Kimmel & Weygandt, 2017). It is important for assets and liabilities to be distinguished in terms of current and long-term to allow for accurate projections and revenue recognition.

Answer 1

Current assets and long term assets and Current liabilties and long term liabilties.

Current assets are those assets that are expected to be converted to cash within one year. an organisation relies on its current assets to fund its ongoing operations and to pay current expenses.Examples of current assets are bills receivable,cash and cash equivalents,prepaid expenses ,inventory etc

Long term assets are those assets which cannot be converted to cash within an year.It has a useful value of more than one year,companies spread their cost over several years.Examples of long erm assets are plant ,equipment,property etc.

Current liabilties are those liabilities which are due within the prevailing financial year.Thay have to be paid within an year.Examples of current liabilities are bills payable,creditors,interest payable etc.

Long term liabilities are those liabilities that take more than one financial year to get settled.It is not paid in same financial year.Exaples of long term liabilities are long term loans,capital lease,bonds payable etc.

It is important to classify assets and liabilities into current and long term according to their nature because otherwise it willbe difficult to run an organisation.A company needs to know what to pay right now and from where it can sourse funds for its operations.Bankers and investors wantto know how liqiud a company is, and comparing its assets and liabilities is the best way for this. and also it is useful to calculate ratios like liquidity ratio,quick ratios of a company.Distinguishing between current and long term is needed or accurate business projections and developments.

Assets and liabilities are the two parts of a business. they are oppsites,but they are equally important. Assets are financial resources which provide some financial benefits in future where as liabilties are obligations which requires being paid off in the near future.Assets are depreciable where liabilities are non depreciable. Its is important to distinguish assets and liabilities in order to reflect companies financial position.Its also needed for preparingits financial statements which make a person to understand its financial position.