Understand the difference between current and noncurrent assets, how to classify them on a balance sheet, and why accounts receivable is considered a current asset.
Dadhich Rami 
Assets show what a business owns and how strong its finances are. There are two main types. Current Assets can be turned into cash within a year. Meanwhile, Noncurrent Assets stay in business for a long time. Knowing the difference helps understand how quickly a company can use their money or things of value.
A 2024 report shows that over 57% of growing businesses improved their working capital last year, meaning their current assets grew compared to short-term debts. So when people ask, “Are accounts receivable a current asset?” or “Is accounts receivable a current or noncurrent asset?”, it’s an important question that helps measure how healthy a business really is.
Current assets are things a business owns that can be easily turned into cash within one year. They show the company’s ability to handle short-term expenses and run daily operations smoothly.
Common examples include cash, accounts receivable, inventory, and short-term investments. These assets are listed first on the balance sheet because they are the most liquid. That means they can be used to quickly pay bills or buy supplies.
For example, accounts receivable is a current asset, since most customers pay within a few weeks or months. This quick flow of money helps the company manage its day-to-day needs.
Noncurrent assets are things a business owns that last for more than a year. They are used to run the business and help it grow over time, not for quick cash needs.
Common examples include land, buildings, machinery, vehicles, furniture, long-term investments, and patents. These assets are also called fixed assets or long-term assets because they stay with the company for many years and slowly lose value through depreciation.
Unlike current assets, noncurrent assets cannot be quickly turned into cash. Instead, they show the company’s long-term strength and stability. The resources that help it operate and earn money in the future.
Accounts receivable are a current asset. This means the money customers owe to a business is expected to be received within one year. It’s part of the company’s short-term resources and helps maintain cash flow for daily expenses.
For example, when a company sells goods or services on credit, that amount becomes accounts receivable. Since most customers pay within a few weeks or months, it fits the definition of a current asset.
However, if a customer is allowed to pay after more than a year, that part of the receivable is treated as a noncurrent asset. In most cases though, accounts receivable appear under the current assets sections of the balance sheet.
| Feature | Current Asset | Non Current Asset |
|---|---|---|
| Time of Use | Within one year | More than one year |
| Example | Cash, Inventory, Accounts Receivable | Land, Building, Machinery |
| Liquidity | Very High | Low |
| Shown in Balance Sheet | Under Current Assets section | Under Non-Current Assets section |
| Role in Business | Helps with daily operations | Helps in long-term growth |
| Depreciation | Not applicable usually | Depreciation applies (except land) |
The line between current and noncurrent assets shapes how we judge a company’s financial health. It tells investors and business owners how much money can be used soon and how much is tied up for the future.
When questions like “Are accounts receivable a current asset?” or “Is accounts receivable a current or noncurrent asset?” come up, the answer helps show how quickly a business can collect cash and handle short-term needs. A correct classification builds a clearer balance sheet and helps make better financial decisions.
Getting asset classification right keeps your balance sheet accurate and easy to read. Here’s how you can do it:
Ask how long the assets will stay with your business.
Think about how the asset helps your business:
Sometimes, an item can have both short-term and long-term parts.
Update your asset list regularly and match it with your financial reports. This helps you spot errors early and gives a true picture of your business health.
Here’s how current and noncurrent assets appear on a company’s balance sheet:
| Assets | Amount ($) |
|---|---|
| Current Assets | |
| Cash | 25,000 |
| Accounts Receivable | 18,000 |
| Inventory | 12,000 |
| Short-Term Investments | 5,000 |
| Total Current Assets | 60,000 |
| Noncurrent Assets | |
| Land | 40,000 |
| Buildings | 80,000 |
| Machinery | 35,000 |
| Patents | 10,000 |
| Total Noncurrent Assets | 165,000 |
| Total Assets | 225,000 |
Not directly. They help the business earn money over time but don’t usually provide quick cash for short-term needs.
Understanding the difference between current and noncurrent assets helps you see both the short-term and long-term health of a business. It also clears up common questions like “Are accounts receivable a current asset?” and “Is accounts receivable a current or noncurrent asset?” both important for reading balance sheets correctly.
In most cases, accounts receivable is a current asset and managing them well keeps your cash flow strong. If you want to track payments, reduce delays, and keep receivables under control, try Quick Receivable, a smart tool that helps you manage invoices and get paid faster, all in one place.
Whether you're looking to streamline invoicing, set up secure online payments, or need a custom made payment solution, our team is always ready to help you move faster, safer, and smarter with QuickPayable.
Get Started Today
Seamless AR Management – Sync, Track, Collect!