Current assets – What is a sales asset?

Current assets are assets that are expected to have a useful life of less than one year. For example, the assets contributed to the payment of daily operations.

What are the current assets?

To understand what the assets are, it is first and foremost important to understand what assets are. Assets denote everything of greater value that is shot into the company. And typically assets are divided into two different forms: fixed assets and current assets.

Current assets have a short useful life, and therefore they are also called short-term assets. The assets are included as a natural part of the company’s normal operations, and a company expects that their current assets will be sold further or that their useful life will end within one year.

Current assets vs. fixed assets

The largest difference between current assets and fixed assets is the expected useful life. While the current assets have a relatively short useful life of one year, fixed assets have an expected useful life that extends over a longer period – typically several years.

Fixed assets cover larger values in the company such as machinery, cars, fixtures, IT equipment and value pairs. Both revenue and fixed assets are included an item in the accounts balance.

Breakdown of current assets

There are several types of trading assets, and often they are divided into:

  • Inventories
  • receivables
  • Cash and cash equivalents

What are inventories?

An inventory consists of all the goods your company has in stock and which can be sold for sale. This applies to both raw materials, finished goods and goods that are being produced.

For example, a stock item for a furniture company is wood materials in the warehouse that are to be used to produce furniture, ready-made shelves, tables, and other things. And the inventory thus takes up space as a sales asset on your company’s balance sheet.

What are the claims?

When your business benefits from its debtors, ie debtors, it is called a receivable. For example, you can have money for good with a supplier if you have paid too much to the person. If you have, they will owe you a claim.

You can also have a claim with SKAT. It may be, for example, that your input VAT (input tax) has been greater than your sales VAT (output tax) and since owes SKAT you the amount of difference between the two.

What is cash?

A sales asset in your company can also be cash. This type of inventory is an expression of funds that are both readily available and can easily be converted into money. In a company there are unbound and easily transferable values available, this is typically in a bank account and they are therefore called cash.

Cash is your company’s funds, which, for example, cover bank deposits and cash holdings. In this way, they provide a picture of your company’s ability to pay for short-term payments.