Let’s look at an example of calculating inventory for a roofing company. In this case, inventory could consist of raw materials, like wood shingles, and work in progress would be roofs/panels under construction.
Short-term investments, or liquid securities, are financial instruments that you hold for 1 year or less. Your short-term investments can be in the form of cash, stocks, bonds or other securities.
Short-term investments are also known
You can also calculate your current assets by adding together all your short-term investments and subtracting any purchase shares that have not been report on a balance sheet yet (if applicable).
Prepayments can be consider a current asset, even though they have no intrinsic value. When you pay for services or products in Kenya Phone Numbers advance of receiving them, that payment is a prepaid expense. Once the service or product is provide to your business, it’s no longer a prepaid expense but instead becomes an expense.
This means that prepayments are on your balance sheet only long enough to cover the cost of the service or product you receive later on.
For example, if you make an advance payment for six months’ worth of website hosting fees, those fees are list as prepaid expenses until each month has pass and the hosting company provides its services to your business.
At that point
These fees are remove from “prepaid” and add to “expenses” for six months until the start date of your next annual contract Kenya Phone Number List comes around again. Assets stay on your books permanently unless you sell them or write them off as worthless.
Other Liquid Assets
The purpose of this section is to think about the other liquid assets that your business has. These are things that, if you need them to be cash, they can be convert into cash rather easily. You’ll want to add these up and record their total amount.
