Management and Organizational Studies 2310A/B Chapter Notes - Chapter 18: Accounts Payable, Current Liability, Current Asset

• School: Western University
• Department: Management and Organizational Studies
• Course: Management and Organizational Studies 2310A/B
• Professor: Nicholas Kahnert

Document Summary

Examine the components of cash and nwc as they change from one year to the next. Current assets are cash and other assets expected to convert to cash within the year. They are presented in the statement of financial position in order of their liquidity. Four of most important items found in current asset section of a statement of financial position are cash, marketable securities (or cash equivalents), accounts receivable, and inventories. Analogous to their investment in current assets, firms use several kinds of short term debt, called current liabilities. Three major items found as current liabilities are accounts payable, expense payable (including accrued wages and taxes), and notes payable. We want to focus on defining cash in terms of other elements of the statement of financial position. This lets us isolate the cash account and explore impact on cash from firms operating and financing decisions. Nwc + fixed assets = long term debt + equity.