Series 66: 1.1.2.1 Assets

Taken from our Series 66 Online Guide

1.1.2.1  Assets

A company’s assets can be divided into two broad categories: current assets and long-term assets. Current assets are anything that could be converted into cash within a year. Current assets consist of:

Cash and cash equivalents—Cash and highly liquid investments, such as securities and money market instruments, that can be easily converted into cash

Accounts receivable—Money that is owed to the company by customers

Prepaid expenses—Goods or services that have been paid for, but will be received in the future (e.g., postage, insurance, office supplies)

Inventory—Products the company is holding and plans to sell in the near future. Accountants can choose between two different ways to value inventory

» FIFO (first in, first out)—Units purchased first are assumed to be sold first

» LIFO (last in, first out)—Units purchased last are assumed to be sold first

In an inflationary environment, a L

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