far m10- current assets & liabilities

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1、M10—CurrentAssets&LiabilitiesStudyNotes-FARM8(Longtermconstructioncontract)CurrentAssetCurrentassetsarethosethatwillbeconvertedintocashwithin12monthsorwithinoneoperatingcycleiftheoperatingcycleislongerthan12monthsThismeansthatanassetthatwillbeconvertedin18monthsmaybeclassifiedasacurrentasset,b

2、utallassetsthatwillbeconvertedinlessthan12monthswillalwaysbeclassifiedascurrentassets.CurrentAssetsnormallyinclude:·Cash·Cashequivalents·Inventories·Receivables·Certainsecurities(suchastradingoravailable-for-salesecuritiesifliquidationisanticipatedwithintheoperatingcycleoroneyear,whicheverislo

3、nger)·Short-terminvestmentsmaturinginlessthanoneyear·Prepaidexpenses·Cashsurrendervalueoflifeinsurance.Cashsurrendervalueoflifeinsurancecanbeacurrentassetoranon-currentassetdependingonintent.Ifthepolicyownerintendstosurrenderthepolicyforitscashsurrendervalueduringthenormaloperatingcycle,itwoul

4、dbeacurrentasset;ifthepolicyownerdoesnotintendtosurrenderthepolicy,asisnormal,itwouldbeanon-currentasset.Ifaninsurancepolicyhasacashsurrendervalue,anyportionofthepremiumpaymentthatdoesnotaddtothatcashsurrendervalueisexpensed.NoncurrentAssetsNoncurrentassetsarethoseassetsthatwillnotbeconvertedi

5、ntocashwithinoneyearorduringtheoperatingcycleiftheoperatingcycleislongerthanoneyear.Cashandcashequivalent8M10—CurrentAssets&LiabilitiesStudentsdoneedtoknowthedefinitionofcashequivalent.Knowthefollowingtable.CashorCashEquivalentNotPartofCash·        Coinandcurrencyonhand(pettycash)·        Lega

6、llyrestricteddeposits·        Savingsaccounts·        NSF(non-sufficientfund)checks·        Checkingaccount·        IOUs·        CertificateofDepositwithanoriginalmaturityof3monthsorless·        Timecertificatesofdeposits(iforiginalmaturitygreaterthan90days)·        Moneymarketfunds·        Re

7、strictedcash·        Undepositedchecks·        Postdatedchecks·        Checkswritten,butnotmailedatyearendbythecompany.(GeneralRule:whoeverphysicallypossessthechecksshouldincludethechecksascashexceptinthecaseofpostdatedcheckandNSFchecks