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1.1. Essence, constitution, structure and functions of current assets
Current assets are assets that serve the process of current economic activity, while participating in the production process and in the process of product selling. The main purpose of current assets is in ensuring the continuity and rhythm of the production and turnover.
The economic essence of current assets is determined by their role in ensuring the continuity of the reproduction process, during which current assets pass through all stages of production and turnover, changing its form and completely transferring its value to the goods produced.
In literature, along with the term "current assets" it is also used the term "working capital". It is believed that under the working capital it should be understood the monetary value of current assets, current assets themselves have a natural form of expression1. Within this framework, it is considered possible to ignore this distinction, because it there will be discussed assets in kind and their value, and both terms will be used in the paper without regard to this distinction. Under the working capital within this work will be understood cash advances for working capital, they refer to the liabilities of the balance sheet and are a source of financing of current assets.
Current assets perform a continuous circulation in the process of current economic activities of an enterprise. By functions, i.e. by their role in the process of production and turnover current assets are divided to current operating funds and funds of turnover. Current operating funds service the sphere of production, they materialize in the objects of work (raw materials, etc.) and partly in the means of work (inventory of little value, etc.), goods in progress, semi-finished products of own manufacture. Circulating productive assets also include prepaid expenses of non-natural forms, such as reserves for future production of goods.
Another element of working capital, turnover funds are not directly involved in the production process. Their purpose is to provide the resources of the reproduction process and to maintenance circulation of funds. Funds of turnover include finished goods and cash.
Circuit of funds of enterprises begin with advance payments in cash for the purchase of raw materials, fuel and other means of production - the first stage of circulation. As a result, the money takes the form of industrial stocks, expressing the transition from the sphere of circulation in the sphere of production. The cost is not spent, and is advanced, as after the completion of circulation, it is returned. The second stage of the circulation occurs during the manufacturing process, where labor is productive consumption provides the means of production, creating a new product that carries a deferred and re-created value. The advanced value again changes its form - from the productive, it becomes the commodity. The third stage is to implement the circulation produced finished goods (services) and cash is received. At this stage, working capital once again passes from the sphere of production into the sphere of circulation. Interrupted commodity circulation is resumed, and the cost of the commodity-form moves into the money. The difference between the amount of money spent on the production and sale of goods (works, services), and received from the sale of manufactured goods (works, services), is the accumulation of cash businesses.
Thus, current assets are advances in the form of money for the systematic formation and use of production assets and current operational funds and funds of turnover in the minimum required amount to ensure the implementation by an enterprise of the production program and the timeliness of payments. Since current assets include both tangible and monetary resources on their organization and efficiency depends not only on the process of material production but also the financial stability of the enterprise.
By the nature of the financial sources current assets are divided for gross, net and own ones.
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