Current assets are assets used to fund the day-to-day operations and pay the ongoing expenses of your party.
Current assets include ‘cash in hand’ and ‘in the bank’, as well as other assets not tied up in long-term investments. In other words, current assets are anything of value that can easily be converted into cash.
The categories recorded under current assets are:
Cash in hand and in the bank
Stock/inventory
Debtors and prepayments
Cash in hand and in the bank
Cash in hand and in the bank includes all petty cash and current and deposit accounts.
Deposit accounts are longer-term investment accounts, where money is less accessible. The deposit is held for a fixed term, or where withdrawals can only be made by giving notice or by losing interest on the account.
The total value of petty cash and current and deposit accounts held by the party should be included.
The accounting note should show petty cash, the types of current and deposit accounts, and the amounts held in each type.
Stock/inventory
Stock, or inventory, are items of significant value that have been purchased but not yet used by the party.
Examples include literature, paper, envelopes and stamps, merchandise and campaign items such as t-shirts, mugs, bags, and items for raffles/prizes.
These are valued at the cost of item, or the relevant fraction of the cost if partially used. They may be subject to a different value (usually zero) if the stock is of no further use.
Debtors and prepayments
Debtors relate to specific definite amounts owed to your party by known organisations or individuals and must be supported by a commitment or obligation to pay.
This could include guarantees of future sponsorship payment for events that have already occurred, or payment after the event for office services provided by the party.
Prepayments are more common. They occur where the party has paid for something in advance and not yet received the benefit.
This could include payment in advance to rent a venue for an event that has not yet occurred or payment for posters and promotional material that you have not yet received.
You should include as a note a breakdown of how the totals of these amounts are made up and what they relate to.