current assets

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Those assets of an organization that are constantly changing their form as they circulate from cash to goods and back to cash again. Cash is used to purchase raw materials, which become work in progress when issued to a production department. The work in progress becomes finished goods, which once they are sold, become debtors or cash from an accounting point of view. Debtors are ultimately changed into cash when they pay, thus completing the cycle. Compare fixed asset.

Subjects: Accounting.

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