A Critical Appraisal of the Current Asset Concept.

Abstract The article focuses on the concept of "current assets" which has undergone very little change in the past twenty years of accounting progress. In order to give full meaning and expression to the redefinition of current assets as enunciated in Accounting Research Bulletin No. 30 and restated in Accounting Research Bulletin No. 43, it is necessary to include that portion of fixed and other depreciable assets and of deferred charges, which will be charged off to operations during the coming operating cycle. Such charges correspond to the concept of current assets in the redefinition as expressed in the phrase "costs to be consumed during the normal operating cycle of the business." The effect of including such items in the current asset category will be to increase working capital. This is justified since these non-cash charges to operations increase the amount of working capital over and above the reported net profit for the period and show the true working capital of the organization at the beginning of the period under the going-concern theory of asset valuation.