COMM 203 Lecture Notes - Lecture 3: Current Liability, Current Asset, Trade Credit
Document Summary
Nwc = cash + other current assets current liabilities. Assets expected to convert to cash within the year. Presented on the balance sheet in order of liquidity. Obligations that are expected to require cash payment within one year. A/p, wages payable, taxes payable, and (current portion of) notes payable. Activities that increase cash / sources of cash: Increase in current liabilities, lt debt, or equity. Decrease in current assets (other than cash), or fixed assets. Activities that decrease cash / uses of cash: Decrease in current liabilities, lt debt, or equity. Increase in current assets (other than cash), or fixed assets. The time between acquiring inventory and collecting cash. Inventory period the time it takes to acquire and sell the inventory: a/r period the time it takes to collect on the sale. The operating cycle describes how an asset moves through the current asset accounts.
