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Current assets are recorded on the debit side of the balance sheet and it represents the net worth of all the assets that can be converted into money within a year. Current assets basically consist of money and money equivalent, receivables, stock and other liquid assets that can be converted to money.
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Current liabilities are recorded on the credit side of the balance sheet and are business’s commitment or financial obligation to pay all the dues within a year. Current liabilities are a short-term financial obligation, accounts payable, accumulated liabilities and other financial obligation.
Financial declaration made by a company informs its net worth in the market. The transactions of a business are recorded in different books of accounts but out of them, balance sheet offers the clearest image of the financial position. The balance sheet consists of assets, liabilities and share holder’s equity. Current assets and current liabilities should be properly recorded, so that business can understand its profit and loss and can take the decision accordingly for the betterment of it.
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